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): February 6, 2020
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
, | |||||
, | |||||
(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:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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 February 6, 2020, Armada Hoffler Properties, Inc. (the “Company”) issued a press release announcing its financial position as of December 31, 2019, results of operations for the three and twelve months ended December 31, 2019, and other related information. Also on February 6, 2020, 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 and twelve months ended December 31, 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.
On February 6, 2020, the Company made available a presentation regarding its 2020 full-year guidance, which is furnished as Exhibit 99.3 to this Current Report on Form 8-K.
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, 99.2, and 99.3 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 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | |
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ARMADA HOFFLER PROPERTIES, INC. | ||
Date: February 6, 2020 | By: | /s/ Michael P. O'Hara |
Michael P. O'Hara | ||
Chief Financial Officer, Treasurer, and Secretary | ||
Exhibit 99.1
 | PRESS RELEASE | |
ARMADA HOFFLER PROPERTIES REPORTS FOURTH QUARTER AND FULL YEAR 2019 RESULTS
Net Income of $0.09 per Diluted Share for the Fourth Quarter
and $0.41 per Diluted Share for the Full Year
Normalized FFO of $0.30 per Diluted Share for the Fourth Quarter
and $1.17 per Diluted Share for the Full Year
Company Introduces 2020 Full-Year Normalized FFO Guidance of $1.16 to $1.20 per Diluted Share
VIRGINIA BEACH, VA, February 6, 2020 – Armada Hoffler Properties, Inc. (NYSE: AHH) today announced its results for the quarter and year ended December 31, 2019 and provided an update on current events.
Highlights include:
• | Net income attributable to common stockholders and OP Unit holders of $7.2 million, or $0.09 per diluted share, for the quarter ended December 31, 2019 compared to $4.9 million, or $0.07 per diluted share, for the quarter ended December 31, 2018. Net income attributable to common stockholders and OP Unit holders of $29.6 million, or $0.41 per diluted share, for the year ended December 31, 2019 compared to $23.5 million, or $0.36 per diluted share, for the year ended December 31, 2018. |
• | Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $22.5 million, or $0.29 per diluted share, for the quarter ended December 31, 2019 compared to $17.1 million, or $0.26 per diluted share, for the quarter ended December 31, 2018. FFO of $80.0 million, or $1.10 per diluted share, for the year ended December 31, 2019 compared to $64.3 million, or $0.99 per diluted share, for the year ended December 31, 2018. |
• | Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $22.9 million, or $0.30 per diluted share, for the quarter ended December 31, 2019 compared to $20.2 million, or $0.30 per diluted share, for the quarter ended December 31, 2018. Normalized FFO of $85.1 million, or $1.17 per diluted share, for the year ended December 31, 2019 compared to Normalized FFO of $66.5 million, or $1.03 per diluted share, for the year ended December 31, 2018. |
• | Introduced 2020 full-year Normalized FFO guidance in the range of $1.16 to $1.20 per diluted share, as set forth in the separate presentation that can be found on the Investors page of the Company's website, ArmadaHoffler.com. The Company's executive management will provide further details regarding its 2020 earnings guidance during today's webcast and conference call. |
• | Core operating property portfolio occupancy at 96.5% as of December 31, 2019 compared to 95.8% as of December 31, 2018. |
• | Same Store Net Operating Income ("NOI") increased 3.8% on a GAAP basis and 4.5% on a cash basis for the year ended December 31, 2019. |
• | Positive releasing spreads on office and retail lease renewals during 2019 of 5.6% on a GAAP basis and 2.2% on a cash basis. |
• | Redesigned our website - ArmadaHoffler.com - to include additional functionality and enhancements including a Sustainability Update. |
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• | Added $109.2 million to third-party construction backlog during the fourth quarter and ended 2019 with total backlog of $242.6 million. |
• | Executed a long-term lease with Apex Entertainment for all 84,000 square feet previously occupied by Dick's Sporting Goods in the Town Center of Virginia Beach. |
• | Announced that the Company will be the majority partner in a joint venture to develop Ten Tryon, a new 15-story 220,000 square foot urban mixed-use development in Charlotte, North Carolina anchored by Publix and a Fortune 100 office tenant. |
• | Announced that the Company will be the majority partner in a joint venture to redevelop the historic Chronicle Mill as part of a new multifamily development in Belmont, North Carolina. |
• | Extended the maturity of our credit facility to 2024 for the senior unsecured revolving component and 2025 for the senior unsecured term loan component. |
• | Raised $25.5 million of gross proceeds through our at-the-market equity offering program at an average price of $18.30 per share during the quarter ended December 31, 2019. Raised $98.4 million of gross proceeds at an average price of $16.76 per share during the year ended December 31, 2019. |
"As we had forecasted at the beginning of last year, 2019 yielded strong bottom line growth with a nearly 14 percent increase in per share earnings," said Louis Haddad, President & CEO. "In 2020, our focus turns to increasing NAV through our capital recycling strategy and executing on exciting new ground up development and high return redevelopment opportunities. We expect to build a solid case for expansion of our multiple and significantly higher earnings over the next few years. As the Company's largest equity holder, management remains committed to generating long-term value for all shareholders."
Financial Results
The fourth quarter changes in net income, FFO, and Normalized FFO as compared to the fourth quarter of 2018 were positively impacted by higher interest income from mezzanine lending activities, higher property operating income due to acquisitions and developments, and higher construction segment gross profit and were negatively impacted by higher interest expense and lower gains on sale of real estate.
Full year changes in net income, FFO, and Normalized FFO as compared to 2018 were positively impacted by higher interest income from mezzanine lending activities, higher property operating income due to acquisitions and developments, and higher construction segment gross profit and were negatively impacted by higher interest expense. Additionally, full year net income and FFO were negatively impacted by mark-to-market losses on interest rate derivatives.
Operating Performance
At the end of the year, the Company’s retail, office, and multifamily core operating property portfolios were 96.9%, 96.6%, and 95.6% occupied, respectively.
Total third-party construction contract backlog was $242.6 million at the end of the year.
Balance Sheet and Financing Activity
As of December 31, 2019, the Company had $960.8 million of total debt outstanding, including $110.0 million outstanding under its revolving credit facility. Total debt outstanding excludes unamortized GAAP fair value adjustments and deferred financing costs. Approximately 51% of the Company’s debt had fixed interest rates or was subject to interest rate swaps as of December 31, 2019. After considering LIBOR interest rate caps with strike prices at or below 275 basis points, as of December 31, 2019, 77% of the Company’s debt was fixed or hedged.
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Outlook
The Company is introducing its 2020 full-year Normalized FFO guidance in the range of $1.16 to $1.20 per diluted share, as set forth in the separate presentation that can be found on the Investors page of the Company's website, ArmadaHoffler.com. The following table outlines the Company's assumptions along with Normalized FFO per diluted share estimates for 2020. The Company's executive management will provide further details regarding its 2020 earnings guidance during today's webcast and conference call.
Full-year 2020 Guidance [1] | Expected Ranges | |||||||
Total NOI | $117.5M | $118.5M | ||||||
Construction Segment Gross Profit | $7.3M | $8.0M | ||||||
G&A Expenses | $12.9M | $13.5M | ||||||
Mezzanine Interest Income [2] | $21.7M | $22.1M | ||||||
Interest Expense | $35.2M | $36.2M | ||||||
Normalized FFO per diluted share [3] | $1.16 | $1.20 | ||||||
[1] Includes the following assumptions:
• | Asset recycling program completed during 2Q20. |
• | Interest expense is calculated based on the Forward LIBOR Curve, which forecasts rates ending the year at 1.48%. |
• | Opportunistic sale of approximately $80 million through the ATM program, resulting in a full year weighted average share count of 79.7 million. |
[2] Includes amortization of exit fees for The Residences at Annapolis Junction & The Interlock.
[3] Normalized FFO excludes certain items, including debt extinguishment losses, acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives, amortization of right-of-use assets attributable to finance leases, severance related costs, and other non-comparable items. See "Non-GAAP Financial Measures." The Company does not provide a reconciliation for its guidance range of Normalized FFO per diluted share to net income per diluted share, the most directly comparable forward-looking GAAP financial measure, because it is unable to provide a meaningful or accurate estimate of reconciling items and the information is not available without unreasonable effort as a result of the inherent difficulty of forecasting the timing and/or amounts of various items that would impact net income per diluted share. For the same reasons, the Company is unable to address the probable significance of the unavailable information and believes that providing a reconciliation for its guidance range of Normalized FFO per diluted share would imply a degree of precision for its forward-looking net income per diluted share that could be misleading to investors.
Supplemental Financial Information
Further details regarding operating results, properties, and leasing statistics can be found in the Company’s supplemental financial package available on the Investors page at ArmadaHoffler.com.
Webcast and Conference Call
The Company will host a webcast and conference call on Thursday, February 6, 2020 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, ArmadaHoffler.com. To participate in the call, please dial 877-407-3982 (domestic) or 201-493-6780 (international). A replay of the conference call will be available through Friday, March 6, 2020 by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13697798.
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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
Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties, and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statement. These forward-looking statements may include comments relating to the current and future performance of the Company’s operating property portfolio, the Company’s development pipeline, the Company's mezzanine program, the Company’s construction and development business, including backlog and timing of deliveries, financing activities, as well as acquisitions, dispositions and the Company’s financial outlook, guidance and expectations. For a description of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, please review the information under the heading “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, and the other documents filed by the Company with the Securities and Exchange Commission. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in the Company's expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by applicable law.
Non-GAAP Financial Measures
The Company calculates FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts ("Nareit"). Nareit defines FFO as net income (loss) (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains or losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.
FFO is a supplemental non-GAAP financial measure. The Company uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring the Company’s operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared period-over-period, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare the Company’s operating performance with that of other REITs.
However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the Company’s properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the Company’s properties, all of which have real economic effects and could materially impact the Company’s results from operations, the utility of FFO as a measure of the Company’s performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the Nareit definition as the Company does, and, accordingly, the Company’s FFO may not be comparable to such other REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of the Company’s performance.
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,
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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, amortization of right-of-use assets attributable to finance leases, 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 at the end of this release.
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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
December 31, | |||||||
2019 | 2018 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Real estate investments: | |||||||
Income producing property | $ | 1,460,723 | $ | 1,037,917 | |||
Held for development | 5,000 | 2,994 | |||||
Construction in progress | 140,601 | 135,675 | |||||
1,606,324 | 1,176,586 | ||||||
Accumulated depreciation | (224,738 | ) | (188,775 | ) | |||
Net real estate investments | 1,381,586 | 987,811 | |||||
Real estate investments held for sale | 1,460 | 929 | |||||
Cash and cash equivalents | 39,232 | 21,254 | |||||
Restricted cash | 4,347 | 2,797 | |||||
Accounts receivable, net | 23,470 | 19,016 | |||||
Notes receivable | 159,371 | 138,683 | |||||
Construction receivables, including retentions | 36,361 | 16,154 | |||||
Construction contract costs and estimated earnings in excess of billings | 249 | 1,358 | |||||
Equity method investments | — | 22,203 | |||||
Operating lease right-of-use assets | 33,088 | — | |||||
Finance lease right-of-use assets | 24,130 | — | |||||
Acquired lease intangible assets, net | 68,702 | 27,561 | |||||
Other assets | 32,901 | 27,616 | |||||
Total Assets | $ | 1,804,897 | $ | 1,265,382 | |||
LIABILITIES AND EQUITY | |||||||
Indebtedness, net | $ | 950,537 | $ | 694,239 | |||
Accounts payable and accrued liabilities | 17,803 | 15,217 | |||||
Construction payables, including retentions | 53,382 | 50,796 | |||||
Billings in excess of construction contract costs and estimated earnings | 5,306 | 3,037 | |||||
Operating lease liabilities | 41,474 | — | |||||
Finance lease liabilities | 17,903 | — | |||||
Other liabilities | 63,045 | 46,203 | |||||
Total Liabilities | 1,149,450 | 809,492 | |||||
Total Equity | 655,447 | 455,890 | |||||
Total Liabilities and Equity | $ | 1,804,897 | $ | 1,265,382 | |||
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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(Unaudited) | ||||||||||||||||
Revenues | ||||||||||||||||
Rental revenues | $ | 41,832 | $ | 30,731 | $ | 151,339 | $ | 116,958 | ||||||||
General contracting and real estate services revenues | 39,741 | 12,705 | 105,859 | 76,359 | ||||||||||||
Total revenues | 81,573 | 43,436 | 257,198 | 193,317 | ||||||||||||
Expenses | ||||||||||||||||
Rental expenses | 9,819 | 7,173 | 34,332 | 27,222 | ||||||||||||
Real estate taxes | 4,202 | 2,995 | 14,961 | 11,383 | ||||||||||||
General contracting and real estate services expenses | 38,683 | 12,154 | 101,538 | 73,628 | ||||||||||||
Depreciation and amortization | 15,690 | 11,260 | 54,564 | 39,913 | ||||||||||||
Amortization of right-of-use assets - finance leases | 147 | — | 377 | — | ||||||||||||
General and administrative expenses | 3,063 | 3,339 | 12,392 | 11,431 | ||||||||||||
Acquisition, development and other pursuit costs | 294 | 190 | 844 | 352 | ||||||||||||
Impairment charges | 252 | 1,518 | 252 | 1,619 | ||||||||||||
Total expenses | 72,150 | 38,629 | 219,260 | 165,548 | ||||||||||||
Gain on real estate dispositions | — | 4,254 | 4,699 | 4,254 | ||||||||||||
Operating income | 9,423 | 9,061 | 42,637 | 32,023 | ||||||||||||
Interest income | 6,593 | 3,577 | 23,215 | 10,729 | ||||||||||||
Interest expense on indebtedness | (8,571 | ) | (5,540 | ) | (30,776 | ) | (19,087 | ) | ||||||||
Interest expense on finance leases | (228 | ) | — | (568 | ) | — | ||||||||||
Equity in income of unconsolidated real estate entities | — | 372 | 273 | 372 | ||||||||||||
Change in fair value of interest rate derivatives | 327 | (2,207 | ) | (3,599 | ) | (951 | ) | |||||||||
Other income (expense), net | 159 | 155 | 585 | 377 | ||||||||||||
Income before taxes | 7,703 | 5,418 | 31,767 | 23,463 | ||||||||||||
Income tax benefit (provision) | 152 | (523 | ) | 491 | 29 | |||||||||||
Net income | 7,855 | 4,895 | 32,258 | 23,492 | ||||||||||||
Net income attributable to noncontrolling interests in investment entities | 427 | — | (213 | ) | — | |||||||||||
Preferred stock dividends | (1,067 | ) | — | (2,455 | ) | — | ||||||||||
Net income attributable to common stockholders and OP Unit holders | $ | 7,215 | $ | 4,895 | $ | 29,590 | $ | 23,492 | ||||||||
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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 December 31, | Year Ended December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income attributable to common stockholders and OP Unit holders | $ | 7,215 | $ | 4,895 | $ | 29,590 | $ | 23,492 | ||||||||
Depreciation and amortization (1) | 15,285 | 11,525 | 53,616 | 40,178 | ||||||||||||
Gain on operating real estate dispositions (2) | — | (833 | ) | (3,220 | ) | (833 | ) | |||||||||
Impairment of real estate assets | — | 1,502 | — | 1,502 | ||||||||||||
FFO attributable to common stockholders and OP Unit holders | $ | 22,500 | $ | 17,089 | $ | 79,986 | $ | 64,339 | ||||||||
Acquisition, development and other pursuit costs | 294 | 190 | 844 | 352 | ||||||||||||
Impairment of intangible assets and liabilities | 252 | 16 | 252 | 117 | ||||||||||||
Loss on extinguishment of debt | 30 | — | 30 | 11 | ||||||||||||
Amortization of right-of-use assets - finance leases | 147 | — | 377 | — | ||||||||||||
Change in fair value of interest rate derivatives | (327 | ) | 2,207 | 3,599 | 951 | |||||||||||
Severance related costs | — | 688 | — | 688 | ||||||||||||
Normalized FFO attributable to common stockholders and OP Unit holders | $ | 22,896 | $ | 20,190 | $ | 85,088 | $ | 66,458 | ||||||||
Net income attributable to common stockholders and OP Unit holders per diluted share and unit | $ | 0.09 | $ | 0.07 | $ | 0.41 | $ | 0.36 | ||||||||
FFO per diluted share and unit attributable to common stockholders and OP Unit holders | $ | 0.29 | $ | 0.26 | $ | 1.10 | $ | 0.99 | ||||||||
Normalized FFO per diluted share and unit attributable to common stockholders and OP Unit holders | $ | 0.30 | $ | 0.30 | $ | 1.17 | $ | 1.03 | ||||||||
Weighted average common shares and units - diluted | 76,762 | 66,836 | 72,644 | 64,754 | ||||||||||||
________________________________________
(1) The adjustment for depreciation and amortization for the years ended December 31, 2019 and 2018 include $0.2 million and $0.3 million, respectively, of depreciation attributable to the Company's investment in One City Center, which was an unconsolidated real estate investment until March 14, 2019. Additionally, the adjustment for depreciation and amortization for the year ended December 31, 2019 excludes $0.8 million of depreciation attributable to the Company's joint venture partners. |
(2) The adjustment for gain on operating real estate dispositions for the year ended December 31, 2019 excludes the portion of the gain on Lightfoot Marketplace that was allocated to our joint venture partner and excludes the gain on sale of a non-operating land parcel. The adjustment for gain on operating real estate dispositions for the year ended December 31, 2018 excludes the gain on the build-to-suit industrial facility because this property was sold before being placed into service. |
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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Table of Contents 2 Forward-Looking Statements 03 Corporate Profile 04 Highlights 05 2020 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 Construction Business Summary 21 Same Store NOI by Segment 22 Top 10 Tenants by Annualized Base Rent 23 Office Lease Summary 24 Office Lease Expirations 25 Retail Lease Summary 26 Retail Lease Expirations 27 Appendix – Definitions & Reconciliations 28 Same Store vs Non-Same Store Properties 32 Reconciliation to Property Portfolio NOI 33 Reconciliation to GAAP Net Income 35
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 February 6, 2020, which has been furnished as Exhibit 99.1 to our Form 8-K filed on February 6, 2020. 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 our 2020 outlook and related assumptions, 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.The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in the Company's expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by applicable law.
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 Eva S. Hardy, Independent Director Louis S. Haddad, Vice Chairman of the Board A. Russell Kirk, Director James C. Cherry, Lead Independent Director Dorothy S. McAuliffe, Independent Director George F. Allen, Independent Director John W. Snow, Independent Director James A. Carroll, 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. Barry Oxford Craig Kucera David Rodgers (212) 240-9871 (540) 277-3366 (216) 737-7341 boxford@dadco.com craigkucera@brileyfbr.com drodgers@rwbaird.com
Highlights 5 • Net income attributable to common stockholders and OP Unit holders of $7.2 million, or $0.09 per diluted share, for the quarter ended December 31, 2019 compared to $4.9 million, or $0.07 per diluted share, for the quarter ended December 31, 2018. Net income attributable to common stockholders and OP Unit holders of $29.6 million, or $0.41 per diluted share, for the year ended December 31, 2019 compared to $23.5 million, or $0.36 per diluted share, for the year ended December 31, 2018. • Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $22.5 million, or $0.29 per diluted share, for the quarter ended December 31, 2019 compared to $17.1 million, or $0.26 per diluted share, for the quarter ended December 31, 2018. FFO of $80.0 million, or $1.10 per diluted share, for the year ended December 31, 2019 compared to $64.3 million, or $0.99 per diluted share, for the year ended December 31, 2018. • Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $22.9 million, or $0.30 per diluted share, for the quarter ended December 31, 2019 compared to $20.2 million, or $0.30 per diluted share, for the quarter ended December 31, 2018. Normalized FFO of $85.1 million, or $1.17 per diluted share, for the year ended December 31, 2019 compared to Normalized FFO of $66.5 million, or $1.03 per diluted share, for the year ended December 31, 2018. • Introduced 2020 full-year Normalized FFO guidance in the range of $1.16 to $1.20 per diluted share, as set forth in the separate presentation that can be found on the Investors page of the Company's website, ArmadaHoffler.com. The Company's executive management will provide further details regarding its 2020 earnings guidance during today's webcast and conference call. • Core operating property portfolio occupancy at 96.5% as of December 31, 2019 compared to 95.8% as of December 31, 2018. • Same Store Net Operating Income ("NOI") increased 3.8% on a GAAP basis and 4.5% on a cash basis for the year ended December 31, 2019. • Positive releasing spreads on office and retail lease renewals during 2019 of 5.6% on a GAAP basis and 2.2% on a cash basis. • Redesigned our website - ArmadaHoffler.com - to include additional functionality and enhancements including a Sustainability Update. • Added $109.2 million to third-party construction backlog during the fourth quarter and ended 2019 with total backlog of $242.6 million. • Executed a long-term lease with Apex Entertainment for all 84,000 square feet previously occupied by Dick's Sporting Goods in the Town Center of Virginia Beach. • Announced that the Company will be the majority partner in a joint venture to develop Ten Tryon, a new 15-story 220,000 square foot urban mixed-use development in Charlotte, North Carolina anchored by Publix and a Fortune 100 office tenant. • Announced that the Company will be the majority partner in a joint venture to redevelop the historic Chronicle Mill as part of a new multifamily development in Belmont, North Carolina. • Extended the maturity of our credit facility to 2024 for the senior unsecured revolving component and 2025 for the senior unsecured term loan component. • Raised $25.5 million of gross proceeds through our at-the-market equity offering program at an average price of $18.30 per share during the quarter ended December 31, 2019. Raised $98.4 million of gross proceeds at an average price of $16.76 per share during the year ended December 31, 2019.
2020 Outlook & Assumptions 6 LOW HIGH Total NOI $117.5M $118.5M Construction Segment Gross Profit $7.3M $8.0M G&A Expenses $12.9M $13.5M Mezzanine Interest Income $21.7M $22.1M Interest Expense $35.2M $36.2M Normalized FFO Per Diluted Share $1.16 $1.20 GUIDANCE ASSUMPTIONS • Asset recycling program completed during 2Q20. • Interest expense is calculated based on Forward LIBOR Curve, which forecasts rates ending the year at 1.48%. • Opportunistic sale of approximately $80 million through the ATM program, resulting in a full year weighted average share count of 79.7 million.
Summary Information 7 $ in thousands, except per share data Three months ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 OPERATIONAL METRICS Net income attributable to AHH and OP Unitholders $7,215 $9,869 $5,992 $6,514 $4,895 Net income attributable to AHH and OP Unitholders per diluted share $0.09 $0.13 $0.08 $0.10 $0.07 Rental properties Net Operating Income (NOI) 27,811 28,167 25,012 21,056 20,563 General contracting and real estate services gross profit 1,058 1,192 1,321 750 551 Adjusted EBITDA(1) 30,843 31,150 28,800 24,727 25,566 (2) Funds From Operations (FFO) attributable to common stockholders and OP unit holders 22,500 21,706 19,137 16,643 17,089 FFO per diluted share attributable to common stockholders and OP unit holders $0.29 $0.29 $0.27 $0.25 $0.26 Normalized FFO attributable to common stockholders and OP unit holders 22,896 22,474 21,212 18,506 20,190 Normalized FFO per diluted share attributable to common stockholders and OP unit holders $0.30 $0.30 $0.30 $0.27 $0.30 Annualized dividend yield 4.58% 4.64% 5.08% 5.39% 5.69% CAPITALIZATION Common shares outstanding 56,278 54,875 52,794 52,327 50,014 Operating Partnership units outstanding 21,273 21,167 21,178 16,992 17,110 Common shares and OP units outstanding 77,551 76,042 73,972 69,319 67,124 Market price per common share $18.35 $18.09 $16.55 $15.59 $14.06 Common equity capitalization(3) $1,423,061 $1,375,600 $1,224,237 $1,080,683 $943,763 Preferred equity capitalization 63,250 63,250 63,250 - - Total equity capitalization $1,486,311 $1,438,850 $1,287,487 $1,080,683 $943,763 Total debt(4) 960,819 951,891 956,068 744,123 700,722 Total capitalization 2,447,130 2,390,741 2,243,555 1,824,806 1,644,485 Less: cash (43,579) (47,606) (25,961) (18,959) (24,051) Total enterprise value $2,403,551 $2,343,135 $2,217,594 $1,805,847 $1,620,434 BALANCE SHEET METRICS Core debt / enterprise value 33.6% 33.4% 27.0% 30.0% 34.0% Core debt + preferred equity / enterprise value 36.2% 36.1% 29.8% - - Fixed charge coverage ratio 2.5x 2.7x 2.9x 3.4x 3.7x Core debt / Annualized core EBITDA 6.8x 6.6x 6.1x 6.1x 6.4x Core debt + preferred equity / Annualized core EBITDA 7.3x 7.2x 6.7x - - CORE PORTFOLIO OCCUPANCY Office(5) 96.6% 96.6% 94.6% 94.9% 93.3% Retail(5) 96.9% 96.8% 96.6% 96.1% 96.2% Multifamily(6) 95.6% 95.8% 94.7% (7) 97.2% 97.3% Weighted Average(8) 96.5% 96.5% 95.6% 96.0% 95.8% (1) See definition on page 30. (2) Includes gain on non-operating real estate of $3.4M and approximately $688K of severance-related costs 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 12/31/2019 12/31/2019 General Contracting Gross Profit $4,321 Stabilized Virginia Beach (VB) Town Center(1) Office(2) $3,303 $13,212 Non-Property Assets(4) Retail(2) 2,064 8,256 As of 12/31/2019 Multifamily 1,864 7,456 Cash and Cash Equivalents $39,232 Total Stabilized VB Town Center NOI $7,231 $28,924 Restricted cash 4,347 Accounts Receivable 23,470 (1) Stabilized Portfolio (Excludes VB Town Center) Notes Receivable, Including Mezzanine Investments (5) 154,100 Office(2) $2,824 $11,296 Construction receivables, including retentions 36,361 Retail 12,681 50,724 Acquired lease intangible assets, net 68,702 Multifamily 4,413 17,652 Other Assets 33,150 Total Stabilized Portfolio (Excludes VB Town Center) $19,918 $79,672 Land Held for Development (Book Value) 5,000 Total Non-Property Assets $364,362 Combined Stabilized Portfolio NOI $27,149 $108,596 Liabilities(4) Run Rate Adjustments(1) As of 12/31/2019 Signed Leases Not Yet Occupied or In Free Rent Period $748 $2,992 Mortgages and Notes Payable(5) $960,819 Net Dispositions Completed Intra-Quarter - - Accounts Payable and Accrued Liabilities 17,803 Total Run Rate Adjustments $748 $2,992 Construction Payables, Including Retentions 53,382 Other Liabilities 68,351 Total $27,897 $111,588 Total Liabilities $1,100,355 Non-Stabilized Portfolio and Development Pipeline (Cost Basis)(3) Preferred Equity See page 18 for a list of properties Liquidation Value As of 12/31/2019 Series A Cumulative Redeemable Perpetual Preferred Stock $63,250 Income Producing Properties $14,000 Construction In Process 136,500 Other Assets 13,200 Common Equity Total Non-Stabilized Development Portfolio 163,700 As of 12/31/2019 Total common shares outstanding 56,278 Redevelopment in Process 13,800 Total OP units outstanding 21,273 Total Non-Stabilized Redevelopment and Development Portfolio $177,500 Total Common Shares & OP Units Outstanding 77,551 (1) NOI from non-stabilized portfolio and development pipeline excluded from stabilized portfolio. (2) Includes leases for spaces occupied by Armada Hoffler which are eliminated for GAAP purposes. (3) NOI not included in Stabilized Portfolio. (4) Excludes lease right-of-use assets and lease liabilities. (5) Excludes GAAP adjustments.
Summary Balance Sheet 9 $ in thousands As of 12/31/2019 12/31/2018 Assets (Unaudited) Real estate investments: Income producing property $1,460,723 $1,037,917 Held for development 5,000 2,994 Construction in progress 140,601 135,675 Accumulated depreciation (224,738) (188,775) Net real estate investments 1,381,586 987,811 Real estate investments held for sale 1,460 929 Cash and cash equivalents 39,232 21,254 Restricted cash 4,347 2,797 Accounts receivable, net 23,470 19,016 Notes receivable 159,371 138,683 Construction receivables, including retentions 36,361 16,154 Construction contract costs and estimated earnings in excess of billings 249 1,358 Equity method investments - 22,203 Operating lease right-of-use assets 33,088 - Finance lease right-of-use assets 24,130 - Acquired lease intangible assets, net 68,702 27,561 Other assets 32,901 27,616 Total Assets $1,804,897 $1,265,382 Liabilities and Equity Indebtedness, net $950,537 $694,239 Accounts payable and accrued liabilities 17,803 15,217 Construction payables, including retentions 53,382 50,796 Billings in excess of costs and estimated earnings 5,306 3,037 Operating lease liabilities 41,474 - Finance lease liabilities 17,903 - Other liabilities 63,045 46,203 Total Liabilities 1,149,450 809,492 Total Equity 655,447 455,890 Total Liabilities and Equity $1,804,897 $1,265,382
Summary Income Statement 10 In thousands, except per share data Three months ended Year ended 12/31/2019 12/31/2018 12/31/2019 12/31/2018 Revenues (Unaudited) Rental revenues $41,832 $30,731 $151,339 $116,958 General contracting and real estate services revenues 39,741 12,705 105,859 76,359 Total Revenues 81,573 43,436 257,198 193,317 Expenses Rental expenses 9,819 7,173 34,332 27,222 Real estate taxes 4,202 2,995 14,961 11,383 General contracting and real estate services expenses 38,683 12,154 101,538 73,628 Depreciation and amortization 15,690 11,260 54,564 39,913 Amortization of right-of-use assets - finance leases 147 - 377 - General and administrative expenses 3,063 3,339 12,392 11,431 Acquisition, development and other pursuit costs 294 190 844 352 Impairment charges 252 1,518 252 1,619 Total Expenses 72,150 38,629 219,260 165,548 Gain on real estate dispositions - 4,254 4,699 4,254 Operating Income 9,423 9,061 42,637 32,023 Interest income 6,593 3,577 23,215 10,729 Interest expense on indebtedness (8,571) (5,540) (30,776) (19,087) Interest expense on finance leases (228) - (568) - Change in fair value of interest rate derivatives 327 (2,207) (3,599) (951) Equity in income of unconsolidated real estate entities - 372 273 372 Other income (expense), net 159 155 585 377 Income before taxes 7,703 5,418 31,767 23,463 Income tax benefit (provision) 152 (523) 491 29 Net Income $7,855 $4,895 $32,258 $23,492 Net income attributable to noncontrolling interest in investment entities 427 - (213) - Preferred stock dividends (1,067) - (2,455) - Net income attributable to AHH and OP Unit holders $7,215 $4,895 $29,590 $23,492 Net income per diluted share and unit attributable to AHH and OP Unit holders $0.09 $0.07 $0.41 $0.36 Weighted Average Shares & Units - Diluted 76,762 66,836 72,644 64,754
FFO, Normalized FFO & AFFO(1) 11 $ in thousands, except per share data Three months ended (Unaudited) Year Ended (Unaudited) 12/31/2019 9/30/2019 6/30/2019 3/31/2019 2019 2018 Funds From Operations Net income attributable to AHH and OP Unitholders $7,215 $9,869 $5,992 $6,514 $29,590 $23,492 Earnings per diluted share $0.09 $0.13 $0.08 $0.10 $0.41 $0.36 Depreciation and amortization(2) 15,285 15,057 13,145 10,129 53,616 40,178 Gains (losses) on dispositions of operating real estate(3) (3,220) - - (3,220) (833) Impairment of real estate assets (4) - - - - - 1,502 FFO $22,500 $21,706 $19,137 $16,643 $79,986 $64,339 FFO per diluted share $0.29 $0.29 $0.27 $0.25 $1.10 $0.99 Normalized FFO Acquisition, development & other pursuit costs 294 93 57 400 844 352 Loss on extinguishment of debt 30 - - - 30 11 Impairment of intangible assets and liabilities 252 - - - 252 117 Severance related costs - - - - - 688 Amortization of right-of-use assets - finance leases 147 145 85 - 377 - Change in fair value of interest rate derivatives (327) 530 1,933 1,463 3,599 951 Normalized FFO $22,896 $22,474 $21,212 $18,506 $85,088 $66,458 Normalized FFO per diluted share $0.30 $0.30 $0.30 $0.27 $1.17 $1.03 Adjusted FFO Non-cash stock compensation 274 323 327 689 1,613 1,133 Acquisition, development & other pursuit costs (294) (93) (57) (400) (844) (352) Tenant improvements, leasing commissions, lease incentives (5) (1,065) (2,057) (841) (809) (4,772) (5,506) Property related capital expenditures (2,426) (1,565) (1,983) (1,494) (7,468) (6,264) Adjustment for loan modification and exit fees (1,860) (1,371) (1,238) (1,118) (5,587) 4,489 Non-cash interest expense(6) 588 425 509 304 1,826 1,116 Cash ground rent payment - finance lease (216) (207) (112) - (535) - GAAP Adjustments (958) (1,686) (1,422) (850) (4,916) (2,691) AFFO $16,939 $16,243 $16,395 $14,828 $64,405 $58,383 AFFO per diluted share $0.22 $0.22 $0.23 $0.22 $0.89 $0.90 Weighted Average Common Shares Outstanding 55,581 53,463 52,451 50,926 53,119 47,512 Weighted Average Operating Partnership ("OP") Units Outstanding 21,181 21,080 18,781 16,993 19,525 17,242 Total Weighted Average Common Shares and OP Units Outstanding 76,762 74,543 71,232 67,919 72,644 64,754 (1) See definitions on pages 29-30. (2) Adjusted for the depreciation attributable to noncontrolling interests in consolidated investments and unconsolidated entities. (3) The adjustment for gain on operating real estate dispositions for the 3 months ended 9/30/2019 excludes the portion of the gain on Lightfoot Marketplace that was allocated to our joint venture partner and excludes the gain on sale of a non-operating land parcel. (4) Impairment of Waynesboro Commons, which was disposed on 4/1/19. (5) Excludes development, redevelopment, and first generation space. (6) Includes non-cash interest expense relating to indebtedness and interest expense on finance leases.
Outstanding Debt 12 $ in thousands Effective Rate as Outstanding as of Debt Stated Rate of 12/31/2019 Maturity Date 2020 2021 2022 2023 2024 Thereafter 12/31/2019 Secured Notes Payable - Core Debt Hoffler Place L+3.24% 5.00% Jan-2021 - $29,059 $29,059 Southgate Square L+1.60% 3.36% Apr-2021 880 19,682 20,562 Encore Apartments 3.25% 3.25% Sep-2021 504 24,338 24,842 4525 Main Street 3.25% 3.25% Sep-2021 647 31,229 31,876 Red Mill West 4.23% 4.23% Jun-2022 445 465 10,386 11,296 Thames Street Wharf L+1.30% 3.06% Jun-2022 - - 70,000 70,000 Hanbury Village 3.78% 3.78% Aug-2022 521 544 17,450 18,515 Marketplace at Hilltop 4.42% 4.42% Oct-2022 397 414 9,706 10,517 1405 Point L+2.25% 4.01% Jan-2023 - 714 754 51,532 53,000 Socastee Commons 4.57% 4.57% Jan-2023 109 115 120 4,223 4,567 Sandbridge Commons L+1.75% 3.51% Jan-2023 247 257 268 7,248 8,020 249 Central Park Retail L+1.60% 3.85% (1) Aug-2023 230 245 260 16,093 16,828 Fountain Plaza Retail L+1.60% 3.85% (1) Aug-2023 139 147 156 9,685 10,127 South Retail L+1.60% 3.85% (1) Aug-2023 101 107 114 7,066 7,388 One City Center L+1.85% 3.61% Apr-2024 574 628 659 691 22,734 25,286 Red Mill Central 4.80% 4.80% Jun-2024 175 175 175 175 1,838 2,538 Premier Apartments L+1.55% 3.31% Oct-2024 34 208 221 234 16,053 16,750 Red Mill South 3.57% 3.57% May-2025 304 315 327 338 351 4,502 6,137 Brooks Crossing Office L+1.60% 3.36% Jul-2025 252 623 645 667 689 11,535 14,411 Market at Mill Creek L+1.55% 3.31% Jul-2025 647 647 647 647 647 11,492 14,727 Johns Hopkins Village L+1.25% 4.19% (1) Aug-2025 941 988 1,031 1,075 1,116 46,649 51,800 North Point Center Note 2 7.25% 7.25% Sep-2025 131 141 152 163 175 1,452 2,214 Lexington Square 4.50% 4.50% Sep-2028 256 268 280 293 306 13,293 14,696 Red Mill North 4.73% 4.73% Dec-2028 100 105 110 116 121 3,842 4,394 Greenside Apartments 3.17% 3.17% Dec-2029 617 695 718 741 762 30,467 34,000 Smith's Landing 4.05% 4.05% Jun-2035 843 880 917 956 994 13,584 18,174 Liberty Apartments 5.66% 5.66% Nov-2043 288 304 322 341 361 12,549 14,165 The Cosmopolitan 3.35% 3.35% Jul-2051 792 819 847 876 906 39,462 43,702 Total - Secured Core Debt 10,174 114,112 116,265 103,160 47,053 188,827 579,591 Secured Notes Payable - Development Pipeline Summit Place L+3.24% 5.00% Jan-2021 - 28,824 28,824 Wills Wharf L+2.25% 4.01% Jun-2023 - - - 29,154 29,154 Premier Retail L+1.55% 3.31% Oct-2024 17 102 109 115 7,907 8,250 Total - Development Pipeline 17 28,926 109 29,269 7,907 - 66,228 Total Secured Notes Payable $10,191 $143,038 $116,374 $132,429 $54,960 $188,827 $645,819 Unsecured Core Debt Senior Unsecured Line of Credit L+1.30%-1.85% 3.26% Jan-2024 - - - - $110,000 $110,000 Senior Unsecured Term Loan L+1.25%-1.80% 3.21% Jan-2025 - - - - - 44,500 44,500 Senior Unsecured Term Loan L+1.25%-1.80% 3.55% - 4.57% (1) Jan-2025 - - - - - 160,500 160,500 Total - Unsecured Core Debt - - - - 110,000 205,000 315,000 Total Notes Payable excluding GAAP Adjustments $10,191 $143,038 $116,374 $132,429 $164,960 $393,827 $960,819 GAAP Adjustments (10,282) Total Notes Payable $950,537 (1) Includes debt subject to interest rate swap locks.
Debt Information 13 $ in thousands Debt Maturities $350,000 5.0% $300,000 4.0% 4.0% 4.0% 4.0% $250,000 3.4% 3.4% 3.0% $200,000 $150,000 2.0% $100,000 1.0% $50,000 $0 0.0% 2020 2021 2022 2023 2024 Thereafter Fixed-Rate Debt Variable-Rate Debt Weighted Average Interest Rate Total Debt Composition Interest Rate Cap Agreements(4) Weighted Average Notional % of Debt Interest Rate Maturity Effective Date Maturity Date Strike Rate Amount Secured vs. Unsecured Debt March 2018 AprilCheck 2020 2.25% $50,000 Unsecured Debt 32.8% 3.8% 4.7 Yrs July 2018 August 2020 2.50% 50,000 Secured Debt 67.2% 3.8% 6.4 Yrs December 2018 January 2021 2.75% 50,000 Variable vs. Fixed-rate Debt May 2019 June 2022 2.50% 100,000 Total Interest Rate Caps $250,000 Variable-rate Debt(2) 49.2% 3.6% 3.4 Yrs Fixed-rate Debt(1)(3) 50.8% 4.0% 8.2 Yrs Fixed-rate Debt(1)(3) 488,276 Fixed-rate and Hedged Debt(1)(3) 76.8% Fixed-rate and Hedged Debt $738,276 Total 3.8% 5.8 Yrs (3) % of Total Debt 76.8% (1) Includes debt subject to interest rate swap locks. (2) Excludes debt subject to interest rate swap locks. (3) Excludes GAAP adjustments. (4) $100M of interest rate caps were purchased subsequent to year end.
Core Debt to Core EBITDA(1) 14 $ in thousands Three months ended 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Net income available to be allocated to AHH and OP Unitholders $7,215 $9,869 $5,992 $6,514 $4,895 Excluding: Depreciation and amortization(2) 15,285 15,057 13,145 10,129 11,525 Amortization of right-of-use assets - finance leases 147 145 85 - - (Gain) Loss on operating real estate dispositions - (3,220) (3) - - (833) Impairment of real estate assets - - - - 1,502 Income tax provision (benefit) (152) (199) (30) (110) 523 Interest expense(2) 8,359 8,624 7,348 6,042 5,692 Interest expense - finance leases 228 228 112 - - Change in fair value of interest rate derivatives (327) 530 1,933 1,463 2,207 Cash ground rent payment - finance leases (216) (207) (112) - - Loss on extinguishment of debt 30 - - - - Non-cash stock compensation 274 323 327 689 55 Adjusted EBITDA $30,843 $31,150 $28,800 $24,727 $25,566 (4) Other adjustments: Development/Redevelopment(2)(6) (1,010) (1,499) (2,183) (2,452) (2,087) (Less) Net Acquisitions/Dispositions Completed Intra-Quarter - (226) (1,978) - - Core EBITDA $29,833 $29,425 $24,639 $22,275 $23,479 Total Debt(5) $960,819 $951,891 $956,068 $744,123 $719,179 Adjustments to debt: (Less) Development/Redevelopment(2)(6) (109,930) (122,597) (161,528) (182,780) (144,736) (Less) Net Acquisitions/Dispositions Completed Intra-Quarter - - (170,476) - - (Less) Cash & restricted cash (43,579) (47,606) (25,961) (18,959) (24,051) Core Debt $807,310 $781,688 $598,103 $542,384 $550,392 Core Debt/Annualized Core EBITDA 6.8x 6.6x 6.1x 6.1x 6.4x (1) See definitions on pages 30. (2) Adjusted for the depreciation and interest expense attributable to noncontrolling interests in consolidated investments and unconsolidated entities. (3) The adjustment for gain on operating real estate dispositions excludes the portion of the gain on Lightfoot Marketplace in 3Q19 that was allocated to our joint venture partner. (4) 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. (5) Excludes GAAP Adjustments. (6) Includes the redevelopment of The Cosmopolitan apartments.
Capitalization & Financial Ratios 15 $ in thousands, except per share data As of December 31, 2019 Debt % of Total Principal Balance Unsecured credit facility 11% $110,000 Unsecured term loans 21% 205,000 Mortgages payable 68% 645,819 4% Total debt $960,819 16% 8% Debt 39% Liquidation Value Preferred Equity Shares Per Share Total Liquidation Value 6.75% Series A Cumulative Redeemable 2,530 $25.00 $63,250 27% Perpetual Preferred Stock (NYSE: AHHPrA) Common Equity % of Total Shares/Units Stock Price Market Value Equity 42% Common stock (NYSE: AHH) 73% 56,278 $18.35 $1,032,701 61% 3% Common units 27% 21,273 $18.35 390,360 Equity market capitalization 77,551 $1,423,061 Total capitalization $2,447,130 Financial Ratios Debt Service Coverage Ratio(1) 2.7x Fixed Charge Coverage Ratio(2) 2.5x Unsecured Credit Facility Unsecured Term Loans Mortgages Payable Net Debt to Adjusted EBITDA 7.8x Core Debt to Core EBITDA 6.8x Preferred Equity Common Units Core Debt + Preferred Equity to Core EBITDA 7.3x Debt/Market capitalization 39% Liquidity Unencumbered Properties Cash on hand $43,579 % of Total Properties 59% Availability under credit facility 40,000 % of Annualized Base Rent 40% Availability under construction loan 58,134 $141,713 (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 stock dividends.
Property Portfolio 16 As of December 31, 2019 Net Rentable Square Feet (RSF)(1) Development/ Development/ Town Unencumbered Core Redevelopment Core Redevelopment ABR per Property Anchor Tenant(s) Location Center ABR Year Built Properties Properties Total Occupancy(2) Leased(2) ABR(3) Leased SF(3) Retail Properties Cheesecake Factory, Brooks Brothers, 249 Central Park Retail Virginia Beach, VA ✓ - 2004 92,400 - 92,400 97.9% - $2,559,701 $28.30 Gordon Biersch Alexander Pointe (6) Harris Teeter Salisbury, NC 100% 1997 64,724 - 64,724 95.7% - 649,308 10.49 Apex Entertainment (Dick's) Apex Entertainment, USI Virginia Beach, VA ✓ 100% 2002 - 103,335 103,335 - 100.0% 1,471,503 14.24 Bermuda Crossroads (6) Food Lion, OfficeMax Chester, VA 100% 2001 122,566 - 122,566 98.4% - 1,755,052 14.56 Broad Creek Shopping Center(6)(9) Food Lion, PetSmart Norfolk, VA 100% 1997/2001 121,504 - 121,504 95.5% - 2,071,357 17.85 Broadmoor Plaza Kroger South Bend, IN 100% 1980 115,059 - 115,059 97.5% - 1,382,468 12.32 Brooks Crossing Retail Various Small Shops Newport News, VA 100% 2016 18,349 - 18,349 66.3% - 169,740 13.95 Columbus Village(6) Barnes & Noble, Shake Shack Virginia Beach, VA ✓ 100% 1980/2013 - 62,362 62,362 - 84.3% 1,556,163 29.59 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% - 881,292 45.97 Courthouse 7-Eleven 7-Eleven Virginia Beach, VA 100% 2011 3,177 - 3,177 100.0% - 139,311 43.85 Dimmock Square Best Buy, Old Navy Colonial Heights, VA 100% 1998 106,166 - 106,166 97.2% - 1,779,915 17.25 Fountain Plaza Retail Ruth's Chris, Ann Taylor Virginia Beach, VA ✓ - 2004 35,961 - 35,961 100.0% - 1,028,958 28.61 Gainsborough Square Food Lion Chesapeake, VA 100% 1999 88,862 - 88,862 95.6% - 1,324,529 15.59 Greentree Shopping Center Various Small Shops Chesapeake, VA 100% 2014 15,719 - 15,719 92.6% - 293,359 20.15 Hanbury Village(6) Harris Teeter, Walgreens Chesapeake, VA 32% 2006/2009 116,635 - 116,635 100.0% - 2,538,926 21.77 Harper Hill Commons (6) Harris Teeter Winston-Salem, NC 100% 2004 96,914 - 96,914 85.0% - 928,028 11.26 Harrisonburg Regal Regal Cinemas Harrisonburg, VA 100% 1999 49,000 - 49,000 100.0% - 717,850 14.65 Indian Lakes Crossing(6) Harris Teeter Virginia Beach, VA 100% 2008 64,973 - 64,973 95.0% - 845,097 13.70 Lexington Square Lowes Foods Lexington, SC - 2017 85,540 - 85,540 98.2% - 1,829,558 21.78 Market at Mill Creek (6) Lowes Foods Mt. Pleasant, SC - 2018 80,405 - 80,405 93.8% - 1,700,522 22.55 Marketplace at Hilltop(6)(9) Total Wine, Panera Virginia Beach, VA - 2000/2001 116,953 - 116,953 100.0% - 2,654,816 22.70 North Hampton Market PetSmart, Hobby Lobby Taylors, SC 100% 2004 114,935 - 114,935 100.0% - 1,479,285 12.87 North Point Center(6) Harris Teeter, Home Depot, Costco Durham, NC 88% 1998/2009 494,746 - 494,746 100.0% - 3,842,617 7.77 Oakland Marketplace(6) Kroger Oakland, TN 100% 2004 64,538 - 64,538 100.0% - 478,857 7.42 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% - 726,757 20.36 Patterson Place BB&B, PetSmart, DSW Durham, NC 100% 2004 160,942 - 160,942 94.3% - 2,397,055 15.79 Perry Hall Marketplace Safeway Perry Hall, MD 100% 2001 74,256 - 74,256 100.0% - 1,270,853 17.11 Premier Retail Williams Sonoma, Pottery Barn Virginia Beach, VA ✓ - 2018 - 39,162 39,162 - 75.6% 969,014 32.73 Providence Plaza Cranfill, Sumner & Hartzog, Chipotle Charlotte, NC 100% 2007/2008 103,118 - 103,118 98.8% - 2,803,576 27.53 Red Mill Commons(6) Homegoods, Walgreens Virginia Beach, VA 8% 2000-2005 373,808 - 373,808 96.5% - 6,427,485 17.81 Renaissance Square Harris Teeter Davidson, NC 100% 2008 80,467 - 80,467 90.4% - 1,267,552 17.43 Sandbridge Commons (6) Harris Teeter Virginia Beach, VA - 2015 76,650 - 76,650 98.5% - 1,056,840 14.00 Socastee Commons Bi-Lo Myrtle Beach, SC - 2000/2014 57,273 - 57,273 96.7% - 632,797 11.43 Southgate Square Burlington, PetSmart, Michaels, Conn's Colonial Heights, VA - 1991/2016 260,131 - 260,131 94.4% - 3,365,533 13.70 South Retail lululemon, free people, CPK Virginia Beach, VA ✓ - 2002 38,515 - 38,515 100.0% - 992,999 25.78 South Square Ross, Petco, Office Depot Durham, NC 100% 1977/2005 109,590 - 109,590 98.1% - 1,873,007 17.42 Southshore Shops Buffalo Wild Wings Chesterfield, VA 100% 2006 40,307 - 40,307 85.3% - 720,087 20.94 Stone House Square(6) Weis Markets Hagerstown, MD 100% 2008 112,274 - 112,274 93.1% - 1,784,568 17.07 Studio 56 Retail McCormick & Schmick's Virginia Beach, VA ✓ 100% 2007 11,594 - 11,594 100.0% - 473,695 40.86 Tyre Neck Harris Teeter(6)(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% - 3,510,597 19.98 Total / Weighted Avg Retail Portfolio 63% 4,004,087 204,859 4,208,946 96.9% $67,292,006 $16.56
Property Portfolio Cont. 17 As of December 31, 2019 Net Rentable Square Feet (RSF)(1) Town Unencumbered Core Development Core Development ABR per Leased Office Properties Anchor Tenant Location Center ABR Year Built Properties Properties Total Occupancy(2) Leased(2) ABR(3) SF(3) 4525 Main Street Clark Nexsen, Anthropologie, Mythics Virginia Beach, VA ✓ - 2014 234,938 - 234,938 98.1% - $6,718,239 $29.14 Armada Hoffler Tower(4)(5) AHH, Troutman Sanders, Williams Mullen Virginia Beach, VA ✓ 100% 2002 320,680 - 320,680 95.8% - 8,889,551 28.94 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 98.5% - 3,184,938 25.10 One City Center Duke University, WeWork Durham, NC - 2019 152,815 - 152,815 84.0% - 4,145,189 32.28 Thames Street Wharf(4) Morgan Stanley, JHU Medical Baltimore, MD - 2010 263,426 - 263,426 100.0% - 7,141,829 27.11 Two Columbus HBA Architects Virginia Beach, VA ✓ 100% 2009 108,459 - 108,459 100.0% - 2,907,497 26.81 Total / Weighted Average Office Portfolio 43% 1,307,255 - 1,307,255 96.6% $34,801,372 $27.56 Units/Beds Development/ Development/ Town Unencumbered Core Redevelopment Total Core Redevelopment Monthly Rent per Multifamily Location Center ABR Year Built Properties Properties Units/Beds Occupancy (2) Occupancy(2) ABR (7) Occupied Unit/Beds 1405 Point(8)(9) Baltimore, MD - 2018 289 - 289 92.0% - $6,933,252 $2,172.07 Encore Apartments Virginia Beach, VA ✓ - 2014 286 - 286 95.8% - 4,318,296 1,313.35 Greenside Apartments Charlotte, NC - 2018 225 - 225 93.8% - 4,010,676 1,584.00 Hoffler Place(10) Charleston, SC - 2019 258 - 258 89.1% - 3,553,932 1,244.37 Johns Hopkins Village(8)(9)(10) Baltimore, MD - 2016 568 - 568 98.8% - 7,692,984 1,142.75 Liberty Apartments(8) Newport News, VA - 2013 197 - 197 93.9% - 2,439,588 1,098.91 Premier Apartments Virginia Beach, VA ✓ - 2018 131 - 131 97.7% - 2,212,920 1,440.70 Smith's Landing(9) Blacksburg, VA - 2009 284 - 284 100.0% - 4,250,868 1,247.32 The Cosmopolitan(8) Virginia Beach, VA ✓ - 2006 - 342 342 - 79.7% (11) 4,736,424 1,651.47 Total / Weighted Avg Multifamily Portfolio - 2,238 342 2,580 95.6% $40,148,940 $1,402.77 (1) The net rentable square footage for each of our retail & office properties is the sum of (a) the square footage of Square Footage existing leases, plus (b) for available space, management’s estimate of net rentable square footage based, in part, on Properties with Tenants Subject to Number of Leased Pursuant to past leases. The net rentable square footage included in office leases is generally consistent with the Building Owners Ground Lease Ground Leases Ground Leases ABR Alexander Pointe 1 7,014 $10,000 and Managers Association, or BOMA, 1996 measurement guidelines. Bermuda Crossroads 2 11,000 179,685 (2) Occupancy for each of our retail & office properties is calculated as (a) square footage under executed leases as of Broad Creek Shopping Center 6 23,825 649,818 December 31, 2019, divided by (b) net rentable square feet as of such date, expressed as a percentage. Occupancy for Columbus Village 1 3,403 200,000 our multifamily properties is calculated as (a) total units occupied as of December 31, 2019, divided by (b) total units Hanbury Village 2 55,586 1,082,118 Harper Hill Commons 1 41,520 373,680 available as of such date, expressed as a percentage. Indian Lakes Crossing 1 50,311 592,385 (3) For the properties in our office and retail portfolios, annualized base rent, or ABR, is calculated by multiplying (a) Market at Mill Creek 1 7,014 63,000 monthly base rent (defined as cash base rent, before contractual tenant concessions and abatements, and excluding Marketplace at Hilltop 1 4,211 150,000 North Point Center 4 280,556 1,146,700 tenant reimbursements for expenses paid by us) as of December 31, 2019 for in-place leases as of such date by (b) 12, Oakland Marketplace 1 45,000 186,347 and does not give effect to periodic contractual rent increases or contingent rental revenue (e.g., percentage rent Red Mill Commons 8 33,961 773,609 based on tenant sales thresholds). ABR per leased square foot is calculated by dividing (a) ABR by (b) square footage Sandbridge Commons 3 60,521 738,500 under in-place leases as of December 31, 2019. In the case of triple net or modified gross leases, our calculation of ABR Stone House Square 1 3,650 181,500 Tyre Neck Harris Teeter 1 48,859 533,285 does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses. Total / Weighted Avg 34 676,431 $6,860,627 (4) The Company occupied 55,390 square feet at these two properties at an ABR of $1.7M, or $31.30 per leased square foot, which amounts are reflected in this table. The rent paid by us is eliminated in accordance with GAAP in the (8) The ABR for Liberty, Cosmopolitan, Johns Hopkins Village, Hoffler Place and 1405 Point excludes approximately consolidated financial statements. $0.3M, $0.9M, $1.1M, $0.1M and $0.4M, respectively, from ground floor retail leases. (5) Includes ABR pursuant to a rooftop lease. (9) The Company leases all or a portion of the land underlying this property pursuant to a ground lease. (6) Net rentable square feet at certain of our retail properties includes pad sites leased pursuant to the ground leases (10) Monthly rent per occupied unit is calculated by dividing total base rental payments for the month ended in the table to the right. December 31, 2019 by the number of occupied beds. (7) For the properties in our multifamily portfolio, ABR is calculated by multiplying (a) base rental payments for the (11) Occupancy calculation excludes 42 units that are offline for redevelopment. month ended December 31, 2019 by (b) 12.
18 Development and Redevelopment Pipeline $ in thousands Schedule(1) Property (1) % Leased or Construction Initial Stabilized Estimated Loan Cost to AHH Estimated (2) (1) Anchor Tenants Projects Type LOI Start Occupancy Operation Cost Commitment Date Ownership % Under Development Chronicle Mill 239 units / Multifamily - 2Q20 1Q22 1Q23 $45,000 TBD $1,400 85% (3) NA Belmont, NC 10,000 sf Southern Post-Multifamily Multifamily 138 units - 2Q20 3Q21 3Q22 39,000 TBD 3,600 80% (3) NA Roswell, GA Southern Post-Retail/Office Mixed-use 137,000 sf 6% 2Q20 3Q21 TBD 51,000 TBD 4,700 80% (3) TBD Roswell, GA Summit Place (Meeting Street) Multifamily 357 beds - 3Q17 3Q20 4Q20 56,000 34,800 51,300 90% (3) NA Charleston, SC Ten Tryon Mixed-use 220,000 sf 38% 2Q20 2Q22 TBD 95,000 TBD 1,200 80% (3) Publix, Fortune 100 office tenant Charlotte, NC Wills Wharf Office 325,000 sf 68% 3Q18 2Q20 2Q21 120,000 76,000 86,500 100% WeWork, Canopy by Hilton, EY Baltimore, MD Total Projects Under Development $406,000 $110,800 $148,700 Delivered Not Stabilized Premier Retail (Town Center Phase VI) Retail 39,000 sf 76% 4Q16 3Q18 1Q21 15,000 8,334 15,000 100% Williams-Sonoma, Pottery Barn Virginia Beach, VA Total Projects Delivered Not Stabilized $15,000 $8,334 $15,000 Total $421,000 $119,134 $163,700 Property % Leased or Out of Construction Anticipated Restabilized Estimated Projected Cost to Date Scope Redevelopment Type LOI Service Start Completion Operation(2) Cost(1) ROI Renovate all 342 units including upgraded The Cosmopolitan finishes, new cabinetry and flooring, energy Multifamily 80%(4) 42 units 1Q18 4Q20 1Q21 $14,000 $6,300 9% Virginia Beach, VA efficient appliances, and LED lighting; modernize resident clubhouse, business center, and leasing Reposition 62,000 SF center to better incorporate Columbus Village I within Town Center and add Virginia Beach Mixed-use 95% 28,250 sf 2Q19 3Q20 4Q20 9,000 7,400 8% Virginia Beach, VA Boulevard small shop frontage along with Shake Shack, Cava, and new Barnes & Noble prototype. Revitalize 84,000 SF of big box retail space within Apex Entertainment Building Town Center into a destination entertainment (Former Dick's Sporting Goods) Mixed-use 100% 84,000 sf 1Q20 4Q20 1Q21 9,000 100 7% concept for a new to market tenant, Apex Virginia Beach, VA Entertainment. Total Projects Under Redevelopment $32,000 $13,800 8% Q4 2019 YTD (1) Represents estimates that may change as the development and redevelopment process proceeds. Capitalized Interest $1,408 $5,932 (2) First fully-stabilized quarter. See same store definition on page 31. (3) Majority Interest in joint venture with preferred return. Capitalized Overhead $778 $3,063 (4) Occupancy calculation excludes 42 units that are offline for redevelopment.
Mezzanine Investments 19 $ in thousands Schedule(1) Principal Property % Leased Initial Mezzanine Mezzanine Mezzanine Type Estimated(1) or LOI Occupancy Loan Maturity Interest Rate Financing(2) Interest QTD Interest YTD Investments with Discounted Purchase Options Delray Plaza (Whole Foods) Retail 83,000 sf 100% 3Q19 4Q20 15% $10,000 $469 $1,622 Delray Beach, FL Nexton Square-Phase I Mixed-use 118,000 sf 88% 3Q19 4Q20 10% 13,000 379 1,962 Summerville, SC Short Term Investments The Residences at Annapolis Junction Multifamily 416 units 89% 3Q17 2Q20 10% 36,000 1,478 4,287 Annapolis Junction, MD $5M Annapolis Junction Loan Modification Fee 762 4,489 North Decatur Square (Whole Foods) Retail 86,000 sf 100% 4Q18 3Q19 15% 15,000 - 1,509 Decatur, GA- Loan was paid off on 7/22/19 Solis Apartments at Interlock Multifamily 349 units NA 4Q20 3Q22 13% 23,000 766 2,333 Atlanta, GA The Interlock Mixed-use 300,000 sf 78% 4Q20 3Q22 15% 67,000 2,717 6,142 Atlanta, GA Total 164,000 6,571 22,344 Mezzanine Interest Expense (1,143) (4,880) Net Mezzanine Interest Income 5,428 17,464 Annapolis Junction Annapolis, MD (1) Represents estimates that may change as the development process proceeds. The Interlock (2) Includes GAAP adjustments. Atlanta, GA (3) 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 & T.J. Maxx, Homegoods, Total Wine, Virginia Beach, VA 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 Lexington, SC 85,531 26,758 - 2,769 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 & Stone Maryland 182,949 39,555 15,200 4,155 7.4% 2Q15 Safeway & Weis Markets 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 $142,150 7.2% DISPOSITIONS Square Cash Cap Properties Location Feet/Units Sale Price Cash Proceeds Gain on Sale Rate Disposition Date Anchor Tenants Lightfoot Marketplace Williamsburg, VA 124,715 $30,275 $11,800 $4,477 (4) 5.8% 3Q19 Harris Teeter 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(3) 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 899,282 sf/ $239,750 $168,400 $63,112 7.0% 203 units (1) Contractual purchase price. (2) Value of OP Units/Stock at issuance. (3) Anchor tenant vacated 12/31/16, which would represent a 2.5% Cash Cap Rate. (4) Includes JV partner’s interest in the property.
Construction Business Summary 21 $ in thousands Total Contract Work in Place as Estimated Date Highlighted Projects Location Value of 12/31/2019 Backlog of Completion The Interlock Atlanta, GA $89,286 $48,152 $41,134 3Q 2020 Solis Apartments at Interlock Atlanta, GA 63,810 14,803 49,007 1Q 2021 Boulders Lakeside Apartments Chesterfield, VA 35,433 7,059 28,373 1Q 2021 27th Street Garage and Apartments Virginia Beach, VA 79,252 5,765 73,487 3Q 2021 Sub Total 267,781 75,779 192,001 All Other Projects 417,965 367,344 50,621 Total $685,746 $443,123 $242,622 Gross Profit Summary Trailing 12 Q4 2019 Months (Unaudited) Revenue $39,741 $105,859 Expense (38,683) (101,538) Gross Profit $1,058 $4,321 The Interlock Atlanta, GA
Same Store NOI by Segment 22 $ in thousands (Reconciliation to GAAP located in appendix on pg. 35) Three months ended Year ended 12/31/2019 12/31/2018 $ Change % Change 12/31/2019 12/31/2018 $ Change % Change Office(1) (Unaudited) (Unaudited) Revenue $5,094 $5,165 ($71) -1.4% 21,239 $20,701 $538 2.6% Expenses(2) 1,937 1,836 101 5.5% 7,735 7,507 228 3.0% Net Operating Income 3,157 3,329 (172) -5.2% 13,504 13,194 310 2.3% Retail(1) Revenue 15,521 15,273 248 1.6% 57,651 56,435 1,216 2.2% Expenses(2) 3,712 3,646 66 1.8% 13,247 13,077 170 1.3% Net Operating Income 11,809 11,627 182 1.6% 44,404 43,358 1,046 2.4% Multifamily(1) Revenue 5,550 5,487 63 1.1% 21,849 20,241 1,608 7.9% Expenses(2) 2,254 2,128 126 5.9% 8,666 8,332 334 4.0% Net Operating Income 3,296 3,359 (63) -1.9% 13,183 11,909 1,274 10.7% Same Store Net Operating Income (NOI) $18,262 $18,315 ($53) -0.3% $71,091 $68,461 $2,630 3.8% GAAP Adjustments (199) (732) 533 (1,721) (2,085) 364 Same store portfolio NOI, cash basis $18,063 $17,583 $480 2.7% $69,370 $66,376 $2,994 4.5% NOI, Cash Basis: Office $3,137 $2,818 $319 11.3% 12,619 $11,625 $994 8.6% Retail 11,675 11,506 169 1.5% 43,894 42,895 999 2.3% Multifamily 3,251 3,259 (8) -0.2% 12,857 11,856 1,001 8.4% $18,063 $17,583 $480 2.7% $69,370 $66,376 $2,994 4.5% NOI: Office 3,157 $3,329 ($172) -5.2% 13,504 $13,194 $310 2.3% Retail 11,809 11,627 182 1.6% 44,404 43,358 1,046 2.4% Multifamily 3,296 3,359 (63) -1.9% 13,183 11,909 1,274 10.7% $18,262 $18,315 ($53) -0.3% $71,091 $68,461 $2,630 3.8% (1) See page 32 for Same Store vs. Non – Same Store Properties. (2) Excludes expenses associated with the Company’s in house asset management division of $656K and $585K for the 3 months ended 12/31/2019 & 12/31/2018, respectively, and $2.5M and $2.1M for the year ended 2019 & 2018, respectively.
Top 10 Tenants by ABR(1) 23 $ in thousands As of December 31, 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 16.6% 4.1% Clark Nexsen 1 2029 2,639 7.6% 1.9% WeWork 1 2034 2,259 6.5% 1.6% Duke University 1 2029 1,540 4.4% 1.1% Huntington Ingalls 1 2029 1,513 4.3% 1.1% Mythics 1 2030 1,187 3.4% 0.8% Johns Hopkins Medicine 1 2023 1,118 3.2% 0.8% Pender & Coward 1 2030 904 2.6% 0.6% Kimley-Horn 1 2027 894 2.6% 0.6% Troutman Sanders 1 2025 872 2.5% 0.6% Top 10 Total $ 18,687 53.7% 13.2% 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 10 2020 - 2035 $ 5,645 8.4% 4.0% Lowes Foods 2 2037 ; 2039 1,976 2.9% 1.4% Regal Cinemas 2 2022 ; 2024 1,713 2.5% 1.2% Bed, Bath, & Beyond 4 2022 - 2025 1,710 2.5% 1.2% PetSmart 5 2022 - 2025 1,438 2.1% 1.0% Food Lion 3 2022 - 2024 1,315 2.0% 0.9% Petco 4 2022 - 2030 877 1.3% 0.6% Weis Markets 1 2028 802 1.2% 0.6% Total Wine & More 2 2024 ; 2027 765 1.1% 0.5% Ross Dress for Less 2 2022 ; 2025 762 1.1% 0.5% Top 10 Total $ 17,003 25.1% 11.9% (1) Excludes leases from the development and redevelopment properties that have not been delivered.
Office Lease Summary 24 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 Q4 2019 2 8,147 1 3,929 $25.43 $24.23 4.9% $24.74 $25.69 -3.7% 4.06 $64,668 $7.94 Q3 2019 1 1,120 4 26,201 38.50 37.00 4.1% 38.50 37.00 4.1% 2.00 1,725 1.54 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 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 Q4 2019 1 2,363 $23.75 6.00 $138,300 $58.53 Q3 2019 7 21,345 24.73 5.30 716,641 33.57 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 Thames Street Wharf & 4525 Main Street Wills Wharf Virginia Beach, VA Baltimore, MD (1) Excludes leases from properties in development.
Office Lease Expirations 25 As of December 31, 2019 Square Footage % Portfolio % of Portfolio Annualized Base Number of Leases of Leases Net Rentable Annualized Base Annualized Rent per Leased Year Expiring Expiring Square Feet Rent Base Rent Square Foot Available - 44,285 3.4% $ - - - M-T-M 2 - - 2,400 - - 2019 - - - - - - 2020 11 24,796 1.9% 781,419 2.2% 31.51 2021 11 48,532 3.7% 1,312,408 3.8% 27.04 2022 11 77,259 5.9% 2,213,506 6.4% 28.65 2023 12 103,647 7.9% 2,707,291 7.8% 26.12 2024 11 136,575 10.4% 3,442,021 9.9% 25.20 2025 13 131,701 10.1% 3,859,343 11.1% 29.30 2026 8 36,863 2.8% 926,963 2.7% 25.15 2027 4 244,864 18.7% 6,921,178 19.9% 28.27 2028 6 63,319 4.8% 1,754,231 5.0% 27.70 2029 7 242,709 18.6% 6,136,048 17.6% 25.28 Thereafter 6 152,705 11.8% 4,744,562 13.6% 31.07 Total / Weighted Average 102 1,307,255 100.0% $ 34,801,370 100.0% $ 27.55 300,000 25.0% 250,000 20.0% Square Feet % of Portfolio 200,000 Under Lease ABR 15.0% 150,000 2,500 or less 3% 10.0% 2,501-10,000 14% 100,000 10,001-20,000 16% 50,000 5.0% 20,001-40,000 21% 40,001-100,000 30% - 0.0% Greater than 100,000 16% Office Portfolio Total 100% Leased Square Feet % ABR of Office Portfolio
Retail Lease Summary 26 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 Q4 2019 23 110,368 14 34,291 $17.94 $16.79 6.9% $17.87 $17.15 4.2% 5.25 $202,576 $1.84 Q3 2019 28 201,931 8 14,338 16.44 15.47 6.3% 16.32 15.72 3.9% 5.14 568,379 2.81 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 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 Q4 2019 13 72,921 $ 17.50 10.02 $3,207,564 $43.99 Q3 2019 5 14,720 20.60 9.60 733,422 49.82 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 Market at Mill Creek Premier Mt. Pleasant, SC Virginia Beach, VA (1) Excludes leases from properties in development and redevelopment.
Retail Lease Expirations 27 As of December 31, 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 - 144,938 3.4% $ - - $ - M-T-M 3 4,200 0.1% 83,758 0.1% 19.94 2019(2) 5 25,565 0.6% 457,889 0.7% 17.91 2020 54 240,266 5.7% 3,578,216 5.3% 14.89 2021 92 351,636 8.4% 6,781,107 10.1% 19.28 2022 89 507,590 12.1% 8,349,932 12.4% 16.45 2023 89 514,434 12.2% 8,398,508 12.5% 16.33 2024 86 530,254 12.6% 8,696,487 12.9% 16.40 2025 59 544,465 12.9% 7,332,252 10.9% 13.47 2026 27 164,729 3.9% 3,209,776 4.8% 19.49 2027 22 136,840 3.3% 3,019,722 4.5% 22.07 2028 24 252,999 6.0% 3,521,547 5.2% 13.92 2029 23 108,253 2.6% 2,152,130 3.2% 19.88 Thereafter 41 682,777 16.2% 11,710,681 17.4% 17.15 Total / Weighted Average 614 4,208,946 100.0% $ 67,292,005 100.0% $ 16.56 800,000 20.0% 700,000 18.0% 16.0% Square Feet % of Portfolio 600,000 14.0% Under Lease ABR 500,000 12.0% 2,500 or less 15% 400,000 10.0% 2,501-10,000 33% 300,000 8.0% 10,001-20,000 14% 6.0% 200,000 20,001-40,000 15% 4.0% 40,001-100,000 22% 100,000 2.0% Greater than 100,000 1% - 0.0% Retail Portfolio Total 100% Leased Square Feet % ABR of Retail Portfolio (1) Includes leases from properties in development, redevelopment, and delivered, not yet stabilized. (2) Leases expired on 12/31/19
28 Appendix Definitions & Reconciliations
Definitions 29 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, amortization of right-of-use assets attributable to finance leases, severance related costs, and other non-comparable items. Management believes that the computation of FFO in accordance 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 30 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, cash ground rent payments for finance leases, 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, and including cash ground rent payments for finance leases. 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 Adjusted EBITDA, excluding certain items, including, but not limited to, the impact of development and redevelopment 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 and redevelopment pipeline, cash & cash equivalents, and restricted cash.
Definitions 31 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.
32 Same Store vs. Non-Same Store Properties Three Months Ended Year Ended Three Months Ended Year Ended 12/31/2019 to 2018 12/31/2019 to 2018 12/31/2019 to 2018 12/31/2019 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 Fountain Plaza Retail X X Wendover Village II X X Greentree Shopping Center 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 Market at Mill Creek X X Thames Street Wharf X X Marketplace at Hilltop X X Two Columbus X X North Hampton Market X X Multifamily Properties North Point Center X X 1405 Point X X Oakland Marketplace X X Encore Apartments X X Parkway Centre X X Greenside Apartments X X Parkway Marketplace X X Hoffler Place X X Patterson Place X X Johns Hopkins Village X X Perry Hall Marketplace X X Liberty Apartments X X Premier Retail X X Premier Apartments X X Providence Plaza X X Smith’s Landing X X The Cosmopolitan X X
33 Reconciliation to Property Portfolio NOI $ in thousands Three months ended 12/31 Year ended 12/31 2019 2018 2019 2018 Office Same Store(1) Rental revenues $5,094 $5,165 $21,239 $20,701 Property expenses 1,937 1,836 7,735 7,507 NOI 3,157 3,329 13,504 13,194 Non-Same Store NOI(2) 3,115 (102) 7,572 (385) Segment NOI $6,272 $3,227 $21,076 $12,809 Retail Same Store(1) Rental revenues $15,521 $15,273 $57,651 $56,435 Property expenses 3,712 3,646 13,247 13,077 NOI 11,809 11,627 44,404 43,358 Non-Same Store NOI(2) 3,414 1,392 13,617 6,897 Segment NOI $15,223 $13,019 $58,021 $50,255 Multifamily Same Store(1) Rental revenues $5,550 $5,487 $21,849 $20,241 Property expenses 2,254 2,128 8,666 8,332 NOI 3,296 3,359 13,183 11,909 Non-Same Store NOI(2) 3,020 958 9,766 3,380 Segment NOI $6,316 $4,317 $22,949 $15,289 Total Property Portfolio NOI $27,811 $20,563 $102,046 $78,353 (1) See page 32 for the Same Store vs. Non-Same Store properties (2) Includes expenses associated with the company’s in house asset management division.
34 Reconciliation to Property Portfolio NOI $ in thousands Three months ended 12/31/2019 Diversified Portfolio Office Retail Multifamily Total NOI - Cash Basis $2,824 $12,681 $4,413 $19,918 GAAP Adjustments 450 605 30 1,085 Elimination of intercompany rent (73) - - (73) NOI $3,201 $13,286 $4,443 $20,930 Town Center of Virginia Beach NOI - Cash Basis $3,303 $2,064 $1,864 $7,231 GAAP Adjustments 21 (144) 9 (114) Elimination of intercompany rent (249) (104) - (353) NOI $3,075 $1,816 $1,873 $6,764 NOI Diversified Portfolio $3,201 $13,286 $4,443 $20,930 Town Center of Virginia Beach 3,075 1,816 1,873 6,764 Unstabilized Properties (4) 121 - 117 Total Property Portfolio NOI $6,272 $15,223 $6,316 $27,811
Reconciliation to GAAP Net Income 35 $ in thousands Three months ended 12/31/2019 Total Rental General Contracting & Office Retail Multifamily Properties Real Estate Services Total Segment revenues $ 10,048 $ 20,320 $ 11,463 $ 41,831 $ 39,741 $ 81,572 Segment expenses 3,776 5,097 5,147 14,020 38,683 52,703 Net operating income $ 6,272 $ 15,223 $ 6,316 $ 27,811 $ 1,058 $ 28,869 Depreciation and amortization (15,690) Amortization of right-of-use assets - finance leases (147) General and administrative expenses (3,063) Acquisition, development and other pursuit costs (294) Impairment charges (252) Interest income 6,593 Interest expense (8,571) Interest expense - finance leases (228) Change in fair value of interest rate derivatives 327 Other income (loss) benefit 159 Income tax benefit 152 Net income $ 7,855 Net loss attributable to noncontrolling interest in investment entities 427 Preferred stock dividends (1,067) Net income attributable to AHH and OP Unitholders $ 7,215 Year ended 12/31/2019 Total Rental General Contracting & Office Retail Multifamily Properties Real Estate Services Total Segment revenues $ 33,269 $ 77,593 $ 40,477 $ 151,339 $ 105,859 $ 257,198 Segment expenses 12,193 19,572 17,528 49,293 101,538 150,831 Net operating income $ 21,076 $ 58,021 $ 22,949 $ 102,046 $ 4,321 $ 106,367 Depreciation and amortization (54,564) Amortization of right-of-use assets - finance leases (377) General and administrative expenses (12,392) Acquisition, development and other pursuit costs (844) Impairment charges (252) Gain on real estate dispositions 4,699 Interest income 23,215 Interest expense (30,776) Interest expense - finance leases (568) Equity in income of unconsolidated real estate entities 273 Change in fair value of interest rate derivatives (3,599) Other income 585 Income tax benefit 491 Net income $ 32,258 Net loss attributable to noncontrolling interest in investment entities (213) Preferred stock dividends (2,455) Net income attributable to AHH and OP Unitholders $ 29,590
CLICK TO EDIT MASTER TITLE STYLE 1
TABLE OF CONTENTS 2 PAGE SECTION 03 Forward Looking Statements 04 2020 Outlook & Assumptions 05 2019/2020 Asset Recycling 06 Evolving Portfolio NOI Composition 07 NOI Contribution by Location 08 Projects Under Development and Redevelopment 09 Mezzanine Investment Program 10 General Contracting and Real Estate Services 11 Normalized FFO Components 12 Balance Sheet Targets 13 Debt Maturities 14 Core Operating Portfolio Occupancy Thames Street Wharf Baltimore, MD 15 2020 Mezzanine Investment Guidance 16 2020 Outlook & Assumptions 17 Proven Performance Since IPO
FORWARD LOOKING STATEMENTS 3 This presentation should be read in conjunction with the unaudited condensed consolidated financial statements appearing in our press release dated February 6, 2020, which has been furnished as Exhibit 99.1 to our Form 8-K filed on February 6, 2020. The Company makes statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements. Likewise, all of our statements regarding our 2020 outlook and related assumptions, projections, anticipated growth in our funds from operations, normalized funds from operations, adjusted funds from operations, funds available for distribution and net operating income are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and the Company may not be able to realize them. The Company does not guarantee that the transactions and events described will happen as described (or that they will happen at all). For further discussion of risk factors and other events that could impact our future results, please refer to the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC), and the documents subsequently filed by us from time to time with the SEC. The Company expressly disclaims any obligation or undertaking to update or revise any forward- looking statement contained herein, to reflect any change in the Company's expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by applicable law. 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.
2020 OUTLOOK & ASSUMPTIONS 4 LOW HIGH Total NOI $117.5M $118.5M Construction Segment Gross Profit $7.3M $8.0M G&A Expenses $12.9M $13.5M Mezzanine Interest Income $21.7M $22.1M Interest Expense $35.2M $36.2M Normalized FFO Per Diluted Share $1.16 $1.20 GUIDANCE ASSUMPTIONS • Asset recycling program completed during 2Q20. • Interest expense is calculated based on Forward LIBOR Curve, which forecasts rates ending the year at 1.48%. • Opportunistic sale of approximately $80 million through the ATM program, resulting in a full-year weighted average share count of 79.7 million.
2019/2020 ASSET RECYCLING 5 CASH CAP ESTIMATED PROPERTY ANCHOR TENANT LOCATION ANNUAL CASH NOI RATE PRICE DISPOSITIONS Lightfoot Marketplace(1) Harris Teeter Williamsburg, VA 5.8% $30M -$1.7M Greentree Marketplace Various small shops Chesapeake, VA 7.5% $4M -$0.3M 7 Shopping Centers (Signed LOI) Various Various 7.8% $108M -$8.4M DISPOSITION NOI -$10.5M ACQUISITIONS The Edison Apartments Multifamily Richmond, VA 6.8% $25M $1.7M Delray Beach Plaza and Delray Beach, FL Whole Foods 6.0% $48M $2.9M West Market Street Station Akron, OH Nexton Square Mixed-Use Retail Summerville, SC 7.4% $42M $3.1M TBD - - ~6.5% ~$20M $1.3M ACQUISITION NOI $9.0M NET NOI EFFECT -$1.5M Nexton Square The Edison Lightfoot Marketplace Charleston, SC Richmond, VA Williamsburg, VA (1) Majority interest in JV development
EVOLVING PORTFOLIO GAAP NOI COMPOSITION 6 $ in millions PORTFOLIO COMPOSITION(1) 2019 2020 GUIDANCE MIDPOINT FULLY STABILIZED(2) RETAIL $50 $47 $48 ENTERTAINMENT & MIXED-USE RETAIL $9 $14 $27 MULTIFAMILY $24 $31 $37 OFFICE $23 $30 $41 TOTAL $106 $121 $153 Fully stabilized portfolio expected to bring over 40% of NOI growth 2020 Guidance Projected Property Segment 2019 Midpoint NOI Fully Stabilized (2) 21% 24% 27% 31% 39% 47% 22% 25% 24% 18% 10% 12% Retail Entertainment & Multifamily Office Mixed Use Retail (1) Numbers exclude AHH rent elimination and expenses associated with the Company’s in house asset management division (2) Fully Stabilized Portfolio assumes announced pipeline is delivered and stabilized per schedule (see page 8 for schedule)
NOI CONTRIBUTION BY LOCATION 7 5% 8% 42% 6% OTHER NORTH CAROLINA 28% TOWN CENTER OF GEORGIA TOWN CENTER OF VIRGINIA BEACH VIRGINIA BEACH 14% MARYLAND PROJECTED PORTFOLIO 2013 FULLY (24 properties) STABILIZED(2) (61 properties) 6% SOUTH CAROLINA 15% 26% 50% NORTH CAROLINA OTHER VIRGINIA(1) OTHER VIRGINIA(1) (1) Excludes properties in Town Center of Virginia Beach (2) Fully Stabilized Portfolio assumes announced pipeline is delivered and stabilized per schedule (see page 8 for schedule)
PROJECTS UNDER DEVELOPMENT AND REDEVELOPMENT 8 INITIAL STABILIZED DEVELOPMENT PROJECTS(1) PROPERTY TYPE SIZE % Leased or LOI ESTIMATED COST(2) OCCUPANCY(2) OPERATION(2) Chronicle Mill(3) Multifamily 239 units / 10,000 sf - 1Q22 1Q23 $45M Belmont, NC Premier Retail Mixed-Use 39,000 sf 76% 3Q18 1Q21 $15M Virginia Beach, VA Southern Post-Multifamily(3) Multifamily 138 units - 3Q21 3Q22 $39M Roswell, GA Southern Post-Retail/Office(3) Mixed-Use 137,000 sf 6% 3Q21 TBD $51M Roswell, GA Summit Place(3) Multifamily 357 beds - 3Q20 4Q20 $56M Charleston, SC Ten Tryon(3) Mixed-Use 220,000 sf 38% 2Q22 TBD $95M Charlotte, NC Wills Wharf Office 325,000 sf 68% 2Q20 2Q21 $120M Baltimore, MD TOTAL INVESTMENT $421M ANTICIPATED RESTABILIZED REDEVELOPMENT PROJECTS(1) PROPERTY TYPE OUT OF SERVICE Projected ROI % Leased or LOI ESTIMATED COST(2) COMPLETION(2) OPERATION(2) The Cosmopolitan Multifamily 42 units 9% 80%(4) 4Q20 1Q21 $14M Virginia Beach, VA Columbus Village I Mixed-Use 28,250 sf 8% 95% 3Q20 4Q20 $9M Virginia Beach, VA Apex Entertainment Building (Formerly Dick's Sporting Goods) Mixed-Use 84,000 sf 7% 100% 4Q20 1Q21 $9M Virginia Beach, VA TOTAL INVESTMENT $32M (1) For our ownership structure, see page 18 & 19 of the 4Q19 Supplemental package. (2) Timing and investment amounts are estimates and subject to change as the development process demands. (3) Majority Interest in joint venture with preferred return. (4) Occupancy calculation excludes 42 units that are offline for redevelopment.
MEZZANINE INVESTMENT PROGRAM 9 PROJECTED PROJECTED TOTAL PROJECTED TOTAL PRINCIPAL PROJECT PRODUCT LOCATION GROSS INTEREST CONSTRUCTION PROJECTED AHH MEZZANINE INCOME ( 1) ( 2) FEES( 1) INCOME ( 1) FINANCING ( 1) Investments with Purchase Option Delray Beach Plaza Retail Delray Beach, FL $10M $3M N/A $3M (Whole Foods) Nexton Square Mixed-Use Summerville, SC $13M $2M $1M $3M Short-Term Investment The Residences at Multifamily Annapolis Junction, MD $36M $20M (3) $2M $22M Annapolis Junction $5M Annapolis Junction Loan Modification Fee $5M N/A $5M Solis Apartments at Multifamily Atlanta, GA $23M $10M $2M $12M Interlock The Interlock Mixed-Use Atlanta, GA $67M $31M (3) $3M $34M Total Projected AHH Income $79M Total Projected Mezzanine Interest Expense ($17M) Total Projected Net Mezzanine Interest Income $62M (1) Timing, investment, and income amounts are estimates and subject to change as the development process demands (2) Reflects projected pay off date that may be subject to change (page 15) (3) Includes purchase option and/or exit fees
GENERAL CONTRACTING AND REAL ESTATE SERVICES 10 $ in millions 2019 2020 Guidance Midpoint Third-Party Construction and Development $4.3 $7.6 Third-Party Construction Backlog As of 12/31/19 $243 3rd Party Gross Profit⁽¹⁾ Volume $8 $300 $7 $250 Millions Millions $6 $200 $5 $4 $150 Internal Volume⁽¹⁾ 3rd Party Volume $3 $100 $2 $50 $1 $0 $0 2013 2014 2015 2016 2017 2018⁽²⁾ 2019 2020E 2013 2014 2015 2016 2017 2018 2019 2020E (1) No profit recognized on internal volume (2) Includes $3.4M sale of distribution center
NORMALIZED FFO COMPONENTS 11 2019 2020 Guidance Midpoint Property FFO(1) $80.2M $87.7M Construction Gross Profit $4.3M $7.6M Purchase Option Sale/Exit Fee $5.6M $5.0M Mezzanine Interest Income (Net of Interest Expense) $12.7M $12.5M NFFO/Share(2) $1.17 $1.18 CONTRIBUTION TO NFFO/SHARE BY COMPONENT 2019 2020 Guidance Midpoint 12%9% 11% 4% 5%8% 5% 4% 6% 7% 82% 77% 79% 78% Property FFO Construction/Build to Suit Net Profit Purchase Option Sale/Exit Fee Net Mezz Interest (1) Property NOI, less associated interest expense (2) Based on a weighted average shares of 76.8M for 2019 and 79.7M for 2020
BALANCE SHEET TARGETS 12 10.0x 8.0x 7.7x 7.8x 8.0x 7.4x 7.3x 7.5x 7.1x 7.0x 7.3x 6.8x 7.0x 6.8x 6.8x 6.6x 6.4x 6.6x 6.1x 6.1x 6.0x 4.0x 2.0x 0.0x 4Q17 1Q18⁽¹⁾ 2Q18⁽¹⁾ 3Q18⁽¹⁾ 4Q18 1Q19 2Q19 3Q19 4Q19 Debt/Annualized EBITDA Core Debt/Annualized Core EBITDA 2020 Capital Sources Timing $ At The Market Program 1Q-4Q $80M TARGET 8X DEBT/EBITDA AND 6X CORE DEBT/CORE EBITDA (1) 2018 leverage elevated due to construction of build-to-suit distribution center (sold in Dec 2018)
DEBT MATURITIES 13 $ in millions $400 $300 $200 Premier Apartments Virginia Beach, VA $100 CONSTRUCTION $0 SECURED 2020 2021 2022 2023 2024 2025 and thereafter UNSECURED Weighted Average Maturity ~5.8 Years
CORE OPERATING PORTFOLIO OCCUPANCY(1) 14 100% 90% Greenside Charlotte, NC 80% 70% 2013 2014 2015 2017 2016 2018 2019 2020E 60% 50% (1) 2013 through 2019 occupancy as of year end and 2020 expected 12/31
2020 MEZZANINE INVESTMENT GUIDANCE 15 TOTAL 2020 PROJECTED PROJECT INTEREST RATE PROJECTED PAYOFF MIDPOINT AHH INCOME Investments with Purchase Option Delray Plaza (Whole Foods) 15% 2Q 2020 $0.5M Nexton Square 10% 2Q 2020 $0.4M Short-Term Investments (1) Annapolis Junction 10% 3Q 2020 $5.2M Solis Interlock 13% 4Q 2021 $3.3M (1) The Interlock 15% 4Q 2021 $12.5M Total Projected Gross Mezzanine Interest Income $21.9M Total Projected Mezzanine Interest Expense -$4.2M Total Projected Net Mezzanine Interest Income $17.7M (1) Includes amortization of exit fees
2020 OUTLOOK & ASSUMPTIONS 16 LOW HIGH Total NOI $117.5M $118.5M Construction Segment Gross Profit $7.3M $8.0M G&A Expenses $12.9M $13.5M Mezzanine Interest Income $21.7M $22.1M Interest Expense $35.2M $36.2M Normalized FFO Per Diluted Share $1.16 $1.20 GUIDANCE ASSUMPTIONS • Asset recycling program completed during 2Q20. • Interest expense is calculated based on Forward LIBOR Curve, which forecasts rates ending the year at 1.48%. • Opportunistic sale of approximately $80 million through the ATM program, resulting in a full-year weighted average share count of 79.7 million.
PROVEN PERFORMANCE SINCE IPO 17 NAV per Share Normalized FFO Common Stock Equity Market Cap Consensus(1) per Share Dividends Per Share 59% Growth 43% Growth 31% Growth $18.28 $0.84 $1.17 $1.5B $0.82 $0.64 $11.50 $0.3B 2013 2019 2014 2019 2013 2019 2Q13 Current IPO IPO (1) Source: Average of most recent sell-side research analysts estimates