UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 4, 2020
(Exact name of registrant as specified in its charter)
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, | |||||
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(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:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On August 4, 2020, Armada Hoffler Properties, Inc. (the “Company”) issued a press release announcing its financial position as of June 30, 2020, results of operations for the three months ended June 30, 2020, and other related information. Also on August 4, 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 months ended June 30, 2020. Copies of such press release and supplemental information are furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
The disclosure contained in Item 2.02 is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | |
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ARMADA HOFFLER PROPERTIES, INC. | ||
Date: August 4, 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 SECOND QUARTER 2020 RESULTS
Net Income of $0.14 Per Diluted Share
Normalized FFO of $0.29 Per Diluted Share
Company Issues Updated 2020 Full-Year Normalized FFO Guidance of $1.09 to $1.13 Per Diluted Share
Board of Directors Declared Cash Dividend of $0.11 Per Common Share
VIRGINIA BEACH, VA, August 4, 2020 – Armada Hoffler Properties, Inc. (NYSE: AHH) today announced its results for the quarter ended June 30, 2020 and provided an update on current events and the impact of COVID-19.
Second Quarter and Recent Highlights:
• | Net income attributable to common stockholders and OP Unit holders of $11.2 million, or $0.14 per diluted share, compared to $6.0 million, or $0.08 per diluted share, for the three months ended June 30, 2019. |
• | Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $22.0 million, or $0.28 per diluted share, compared to $19.1 million, or $0.27 per diluted share, for the three months ended June 30, 2019. See "Non-GAAP Financial Measures." |
• | Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $22.6 million, or $0.29 per diluted share, compared to $21.2 million, or $0.30 per diluted share, for the three months ended June 30, 2019. |
• | Issued updated 2020 full-year Normalized FFO guidance in the range of $1.09 to $1.13 per diluted share. 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 93.6% as of June 30, 2020 compared to 95.6% as of March 31, 2020. The Company's June 30, 2020 occupancy includes office at 97.0%, retail at 95.1%, and multifamily at 87.9%. Without the seasonal effect of the student housing properties, multifamily occupancy was 93.9% , which is higher than the sector's occupancy of 93.5% at March 31, 2020. |
• | Positive releasing spreads on office lease renewals during the second quarter of 8.6% on a GAAP basis and 4.7% on a cash basis. Positive releasing spreads on retail lease renewals during the second quarter of 7.7% on a GAAP basis and 5.5% on a cash basis. |
• | Collected 87% of portfolio rents for the second quarter, including 100% of office tenant rents, 99% of multifamily tenant rents, and 72% of retail tenant rents. See pages 27-28 of the supplemental financial package for more details. |
• | Collected 93% of portfolio rents for the month of July, including 100% of office tenant rents, 97% of multifamily tenant rents, and 86% of retail tenant rents. |
• | Ended the second quarter with $193.7 million of third-party construction backlog. All third-party construction sites remain active and fully operational. |
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• | Sold a portfolio of seven unencumbered retail assets comprising over 630,000 square feet, or 15% of the Company's retail portfolio, for $90.0 million. |
• | Terminated the 69,000 square foot lease with WeWork for the top two floors of the Wills Wharf office building at Harbor Point on the Baltimore waterfront. |
• | Board of Directors declared third quarter cash dividend of $0.11 per common share payable on October 8, 2020 to stockholders of record on September 30, 2020. |
• | Board of Directors declared cash dividend of $0.421875 per share on its Series A Cumulative Redeemable Perpetual Preferred Stock payable on October 15, 2020 to stockholders of record on October 1, 2020. |
• | Student housing portfolio 95% pre-leased for the 2020-2021 academic year. |
"Although there remains a fair amount of uncertainty surrounding the effects of the virus on the economy, I am pleased to report that the first half of 2020 represented the strongest six months of earnings in our Company's history," said Louis Haddad, President & CEO. "We believe that with our multiple property types and operating divisions, we will thrive in what will likely be a slow and uneven return to normalcy over the next 18 to 24 months. Over the next few quarters, we believe that investors will recognize the demonstrable strength of our diversified model, the quality of our portfolio, the value of our construction and development platforms, and the determination of our management team, one that has successfully guided this Company through the previous four economic downturns."
Financial Results
Net income attributable to common stockholders and OP Unit holders for the second quarter increased to $11.2 million compared to $6.0 million for the second quarter of 2019. The period-over-period change was primarily due to increased operating income from the property portfolio as a result of property acquisitions and the completion of development projects. Additionally, the increase was caused by the gain on sale recorded upon the disposition of operating properties during the second quarter of 2020 and changes in fair value of interest rate derivatives. These increases were partially offset by a decrease in interest income and an increase in the allowance for bad debt (recorded as an adjustment to rental revenues) in the retail portfolio as a result of the COVID-19 pandemic.
Normalized FFO attributable to common stockholders and OP Unit holders for the second quarter increased to $22.6 million compared to $21.2 million for the second quarter of 2019. FFO attributable to common stockholders and OP Unit holders for the second quarter increased to $22.0 million compared to $19.1 million for the second quarter of 2019. The period-over-period changes in Normalized FFO and FFO were positively impacted by property acquisitions and completion of development projects. These increases in Normalized FFO and FFO were partially offset by decreased interest income and an increase in the allowance for bad debt (recorded as an adjustment to rental revenues) in the retail portfolio as a result of the COVID-19 pandemic.
Operating Performance
At the end of the second quarter, the Company’s office, retail and multifamily core operating property portfolios were 97.0%, 95.1% and 87.9% occupied, respectively. Without the seasonal effect of the student housing properties, multifamily occupancy was 93.9% , which is higher than the sector's occupancy of 93.5% at March 31, 2020.
Total construction contract backlog was $193.7 million at the end of the second quarter.
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Balance Sheet and Financing Activity
As of June 30, 2020, the Company had $956.7 million of total debt outstanding, including $80.0 million outstanding under its revolving credit facility and $205.0 million under its senior unsecured term loan facility. Total debt outstanding excludes unamortized GAAP fair value adjustments and deferred financing costs. Approximately 61% of the Company’s debt had fixed interest rates or was subject to interest rate swaps as of June 30, 2020. After giving effect to LIBOR interest rate caps with strike prices at or below 275 basis points as of June 30, 2020, 100% of the Company’s debt was either fixed or hedged.
As part of the sale of seven unencumbered retail assets, the Company repaid $61.9 million on its revolving credit facility. As of June 30, 2020, the outstanding balance on the revolving credit facility was $80.0 million; as a result of the sale of the retail assets and the related reduction in our unencumbered base, borrowing capacity under the revolving credit facility was reduced to $100.0 million from $150.0 million. The Company has no debt maturing during the remainder of 2020.
The Company is currently in compliance with all debt covenants.
Outlook
The Company issued updated 2020 full-year Normalized FFO guidance in the range to $1.09 to $1.13 per diluted share. The following table updates the Company's assumptions underpinning this forecast. The Company's executive management will provide further details regarding its 2020 earnings guidance during today's webcast and conference call.
Full-year 2020 Guidance [1] | Expected Ranges | |||||||
Total NOI | $107.0M | $108.9M | ||||||
Construction Segment Gross Profit | $7.3M | $8.0M | ||||||
G&A Expenses | $12.9M | $13.5M | ||||||
Mezzanine Interest Income | $19.5M | $20.0M | ||||||
Interest Expense | $29.3M | $30.3M | ||||||
Normalized FFO per diluted share [2] | $1.09 | $1.13 | ||||||
[1] Includes the following assumptions:
• | Disposition of two unencumbered assets for $13M in cash proceeds at the end of the third quarter |
• | Acquisition of Nexton Square and Edison Apartments in the third quarter |
• | Assumes additional termination fees will be recognized in 2020 |
• | An additional $1.5M of bad debt write offs for the remainder of 2020 |
• | Interest expense is calculated based on Forward LIBOR Curve, which forecasts rates ending the year at 0.16% |
• | Opportunistic use of the preferred stock ATM |
[2] 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.
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Supplemental Financial Information
Further details regarding operating results, properties and leasing statistics can be found in the Company’s supplemental financial package available at www.ArmadaHoffler.com.
Webcast and Conference Call
The Company will host a webcast and conference call on Tuesday, August 4, 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, www.ArmadaHoffler.com. To participate in the call, please dial 877-407-3982 (domestic) or 201-493-6780 (international). A replay of the conference call will be available through Friday, September 4, 2020 by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13704894.
This quarter, given the combined high volume of conference calls occurring during this time of year generally and the impact that the COVID-19 virus has had on staffing and capacity at our conference call provider, we anticipate potential delays if you dial in to be connected to the live call. As a result we encourage stockholders and interested parties to join us for the Company’s earnings results discussion via the webcast link. If you choose to dial in to the live call please allow extra time to be connected to the call.
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 construction and development business, including backlog and timing of deliveries and estimated costs, financing activities, and the Company’s financial outlook and expectations. For a description of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, please review the information under the heading “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and the other documents filed by the Company with the Securities and Exchange Commission from time to time, including the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020. The Company’s actual future results and trends may differ materially from expectations depending on a variety of factors discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”). These factors include, without limitation: (a) the impact of the coronavirus (COVID-19) pandemic on macroeconomic conditions and economic conditions in the markets in which the Company operates, including, among others: (i) disruptions in, or a lack of access to, the capital markets or disruptions in the Company’s ability to borrow amounts subject to existing construction loan commitments; (ii) adverse impacts to the Company’s tenants’ and other third parties’ businesses and financial condition that adversely affect the ability and willingness of the Company’s tenants and other third parties to satisfy their rent and other obligations to the Company, including deferred rent; (iii) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration of the leases or to re-lease the Company’s properties on the same or better terms in the event of nonrenewal or early termination of existing leases; and (iv) federal, state and local government initiatives to mitigate the impact of the COVID-19 pandemic, including additional restrictions on business activities, shelter-in place orders and other restrictions, and the timing and amount of economic stimulus or other initiatives; (b) the Company’s ability to continue construction on development and construction projects, in each case on the timeframes and on terms currently anticipated; (c) the Company’s ability to accurately assess and predict the impact of the COVID-19 pandemic on its results of
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operations, financial condition, dividend policy, acquisition and disposition activities and growth opportunities; and (d) the Company’s ability to maintain compliance with the covenants under its existing debt agreements or to obtain modifications to such covenants from the applicable lenders.
Non-GAAP Financial Measures
The Company calculates FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts ("Nareit"). Nareit defines FFO as net income (loss) (calculated in accordance with GAAP), excluding depreciation and amortization related to real estate, gains or losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.
FFO is a supplemental non-GAAP financial measure. The Company uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring the Company’s operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared period-over-period, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare the Company’s operating performance with that of other REITs.
However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the Company’s properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the Company’s properties, all of which have real economic effects and could materially impact the Company’s results from operations, the utility of FFO as a measure of the Company’s performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the Nareit definition as the Company does, and, accordingly, the Company’s FFO may not be comparable to such other REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of the Company’s performance.
Management also believes that the computation of FFO in accordance with Nareit’s definition includes certain items that are not indicative of the results provided by the Company’s operating property portfolio and affect the comparability of the Company’s period-over-period performance. Accordingly, management believes that Normalized FFO is a more useful performance measure that excludes certain items, including but not limited to, acquisition, development and other pursuit costs, gains or losses from the early extinguishment of debt, impairment of intangible assets and liabilities, mark-to-market adjustments for interest rate derivatives, provision for unrealized credit losses, 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 in the final page of this release.
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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, 2020 | December 31, 2019 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Real estate investments: | ||||||||
Income producing property | $ | 1,431,527 | $ | 1,460,723 | ||||
Held for development | 13,607 | 5,000 | ||||||
Construction in progress | 108,444 | 140,601 | ||||||
1,553,578 | 1,606,324 | |||||||
Accumulated depreciation | (232,108 | ) | (224,738 | ) | ||||
Net real estate investments | 1,321,470 | 1,381,586 | ||||||
Real estate investments held for sale | — | 1,460 | ||||||
Cash and cash equivalents | 70,979 | 39,232 | ||||||
Restricted cash | 4,132 | 4,347 | ||||||
Accounts receivable, net | 28,461 | 23,470 | ||||||
Notes receivable, net | 182,245 | 159,371 | ||||||
Construction receivables, including retentions, net | 42,787 | 36,361 | ||||||
Construction contract costs and estimated earnings in excess of billings, net | 333 | 249 | ||||||
Operating lease right-of-use assets | 32,907 | 33,088 | ||||||
Finance lease right-of-use assets | 23,837 | 24,130 | ||||||
Acquired lease intangible assets, net | 55,832 | 68,702 | ||||||
Other assets | 35,883 | 32,901 | ||||||
Total Assets | $ | 1,798,866 | $ | 1,804,897 | ||||
LIABILITIES AND EQUITY | ||||||||
Indebtedness, net | $ | 953,753 | $ | 950,537 | ||||
Accounts payable and accrued liabilities | 22,705 | 17,803 | ||||||
Construction payables, including retentions | 58,253 | 53,382 | ||||||
Billings in excess of construction contract costs and estimated earnings | 9,320 | 5,306 | ||||||
Operating lease liabilities | 41,550 | 41,474 | ||||||
Finance lease liabilities | 17,928 | 17,903 | ||||||
Other liabilities | 48,411 | 63,045 | ||||||
Total Liabilities | 1,151,920 | 1,149,450 | ||||||
Total Equity | 646,946 | 655,447 | ||||||
Total Liabilities and Equity | $ | 1,798,866 | $ | 1,804,897 | ||||
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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(Unaudited) | ||||||||||||||||
Revenues | ||||||||||||||||
Rental revenues | $ | 39,915 | $ | 36,378 | $ | 82,204 | $ | 67,287 | ||||||||
General contracting and real estate services revenues | 57,398 | 21,444 | 104,666 | 38,480 | ||||||||||||
Total revenues | 97,313 | 57,822 | 186,870 | 105,767 | ||||||||||||
Expenses | ||||||||||||||||
Rental expenses | 8,309 | 7,915 | 17,684 | 14,640 | ||||||||||||
Real estate taxes | 4,233 | 3,451 | 8,566 | 6,579 | ||||||||||||
General contracting and real estate services expenses | 55,342 | 20,123 | 100,892 | 36,409 | ||||||||||||
Depreciation and amortization | 13,777 | 13,505 | 28,056 | 23,409 | ||||||||||||
Amortization of right-of-use assets - finance leases | 146 | 85 | 293 | 85 | ||||||||||||
General and administrative expenses | 2,988 | 2,951 | 6,781 | 6,352 | ||||||||||||
Acquisition, development and other pursuit costs | 502 | 57 | 529 | 457 | ||||||||||||
Impairment charges | — | — | 158 | — | ||||||||||||
Total expenses | 85,297 | 48,087 | 162,959 | 87,931 | ||||||||||||
Gain on real estate dispositions | 2,776 | — | 2,776 | — | ||||||||||||
Operating income | 14,792 | 9,735 | 26,687 | 17,836 | ||||||||||||
Interest income | 4,412 | 5,593 | 11,638 | 10,912 | ||||||||||||
Interest expense on indebtedness | (6,999 | ) | (7,491 | ) | (14,958 | ) | (13,377 | ) | ||||||||
Interest expense on finance leases | (228 | ) | (112 | ) | (457 | ) | (112 | ) | ||||||||
Equity in income of unconsolidated real estate entities | — | — | — | 273 | ||||||||||||
Change in fair value of interest rate derivatives | (6 | ) | (1,933 | ) | (1,742 | ) | (3,396 | ) | ||||||||
Unrealized credit loss release (provision) | 117 | — | (260 | ) | — | |||||||||||
Other income (expense), net | 286 | 4 | 344 | 64 | ||||||||||||
Income before taxes | 12,374 | 5,796 | 21,252 | 12,200 | ||||||||||||
Income tax benefit (provision) | (65 | ) | 30 | 192 | 140 | |||||||||||
Net income | 12,309 | 5,826 | 21,444 | 12,340 | ||||||||||||
Net loss attributable to noncontrolling interests in investment entities | 44 | 320 | 136 | 320 | ||||||||||||
Preferred stock dividends | (1,175 | ) | (154 | ) | (2,242 | ) | (154 | ) | ||||||||
Net income attributable to common stockholders and OP Unit holders | $ | 11,178 | $ | 5,992 | $ | 19,338 | $ | 12,506 | ||||||||
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ARMADA HOFFLER PROPERTIES, INC.
RECONCILIATION OF NET INCOME TO FFO & NORMALIZED FFO
(in thousands, except per share amounts)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(Unaudited) | ||||||||||||||||
Net income attributable to common stockholders and OP Unit holders | $ | 11,178 | $ | 5,992 | $ | 19,338 | $ | 12,506 | ||||||||
Depreciation and amortization(1) | 13,644 | 13,145 | 27,736 | 23,274 | ||||||||||||
Gain on operating real estate dispositions | (2,776 | ) | — | (2,776 | ) | — | ||||||||||
FFO attributable to common stockholders and OP Unit holders | $ | 22,046 | $ | 19,137 | $ | 44,298 | $ | 35,780 | ||||||||
Acquisition, development and other pursuit costs | 502 | 57 | 529 | 457 | ||||||||||||
Impairment of intangible assets and liabilities | — | — | 158 | — | ||||||||||||
Unrealized credit loss provision (release) | (117 | ) | — | 260 | — | |||||||||||
Amortization of right-of-use assets - finance leases | 146 | 85 | 293 | 85 | ||||||||||||
Change in fair value of interest rate derivatives | 6 | 1,933 | 1,742 | 3,396 | ||||||||||||
Normalized FFO available to common stockholders and OP Unit holders | $ | 22,583 | $ | 21,212 | $ | 47,280 | $ | 39,718 | ||||||||
Net income attributable to common stockholders and OP Unit holders per diluted share and unit | $ | 0.14 | $ | 0.08 | $ | 0.25 | $ | 0.18 | ||||||||
FFO attributable to common stockholders and OP Unit holders per diluted share and unit | $ | 0.28 | $ | 0.27 | $ | 0.57 | $ | 0.51 | ||||||||
Normalized FFO attributable to common stockholders and OP Unit holders per diluted share and unit | $ | 0.29 | $ | 0.30 | $ | 0.61 | $ | 0.57 | ||||||||
Weighted average common shares and units - diluted | 77,941 | 71,232 | 77,806 | 69,584 | ||||||||||||
________________________________________
(1) The adjustment for depreciation and amortization for the three months ended June 30, 2020 and 2019 excludes $0.1 million and $0.4 million, respectively, of depreciation attributable to the Company's joint venture partners. The adjustment for depreciation and amortization for the six months ended June 30, 2020 and 2019 excludes $0.3 million and $0.4 million, respectively, of depreciation attributable to the Company's joint venture partners. The adjustment for depreciation and amortization for the six months ended June 30, 2019 includes $0.2 million of depreciation attributable to the Company's investment in One City Center from January 1, 2019 to March 14, 2019, which was an unconsolidated real estate investment during this period. |
Contact:
Michael P. O’Hara
Armada Hoffler Properties, Inc.
Chief Financial Officer, Treasurer, and Secretary
Email: MOHara@ArmadaHoffler.com
Phone: (757) 366-6684
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TABLE OF CONTENTS 2 03 Forward Looking Statements 04 Corporate Profile 05 Highlights 06 2020 Outlook & Assumptions 07 Summary Information 08 Net Asset Value Component Data 09 Summary Balance Sheet 10 Summary Income Statement 11 FFO, Normalized FFO & Adjusted FFO 12 Outstanding Debt 13 Debt Information 14 Core Debt to Core EBITDA 15 Capitalization & Financial Ratios 16 Property Portfolio 18 Development & Redevelopment Pipeline 19 Mezzanine Investments 20 Acquisitions & Dispositions 21 Construction Business Summary 22 Same Store NOI by Segment 23 Top 10 Tenants by Annualized Base Rent 24 Lease Summary 25 Office Lease Expirations 26 Retail Lease Expirations 27 COVID-19 Update 29 Appendix – Definitions & Reconciliations 33 Same Store vs Non-Same Store Properties 34 Reconciliation to Property Portfolio NOI 36 Reconciliation to GAAP Net Income 1405 Point Baltimore, MD
3 FORWARD - LOOKING STATEMENTS This Supplemental Financial Package should be read in conjunction with the unaudited condensed consolidated financial statements appearing in our press release dated August 4, 2020, which has been furnished as Exhibit 99.1 to our Form 8-K filed on August 4, 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”)). These forward-looking statements may include comments relating to the current and future performance of the Company’s operating property portfolio, the Company’s development pipeline, the Company’s construction and development business, including backlog and timing of deliveries and estimated costs, financing activities, and the Company’s financial outlook and expectations. For a description of factors that may cause the Company’s actual results or performance to differ from its forward- looking statements, please review the information under the heading “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and the other documents filed by the Company with the Securities and Exchange Commission from time to time, including the Company’s Quarterly Report on Form 10-K filed with the SEC on May 6, 2020. The Company’s actual future results and trends may differ materially from expectations depending on a variety of factors discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”). These factors include, without limitation: (a) the impact of the coronavirus (COVID-19) pandemic on macroeconomic conditions and economic conditions in the markets in which the Company operates, including, among others: (i) disruptions in, or a lack of access to, the capital markets or disruptions in the Company’s ability to borrow amounts subject to existing construction loan commitments; (ii) adverse impacts to the Company’s tenants’ and other third parties’ businesses and financial condition that adversely affect the ability and willingness of the Company’s tenants and other third parties to satisfy their rent and other obligations to the Company, including deferred rent; (iii) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration of the leases or to re-lease the Company’s properties on the same or better terms in the event of nonrenewal or early termination of existing leases; and (iv) federal, state and local government initiatives to mitigate the impact of the COVID-19 pandemic, including additional restrictions on business activities, shelter-in place orders and other restrictions, and the timing and amount of economic stimulus or other initiatives; (b) the Company’s ability to continue construction on development and construction projects, in each case on the timeframes and on terms currently anticipated; (c) the Company’s ability to accurately assess and predict the impact of the COVID-19 pandemic on its results of operations, financial condition, dividend policy, acquisition and disposition activities and growth opportunities; and (d) the Company’s ability to maintain compliance with the covenants under its existing debt agreements or to obtain modifications to such covenants from the applicable lenders.
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. For more information, visit ArmadaHoffler.com. BOARD OF DIRECTORS CORPORATE OFFICERS Daniel A. Hoffler, Executive Chairman of the Board Louis S. Haddad, President and Chief Executive Officer Louis S. Haddad, Vice Chairman of the Board Michael P. O’Hara, Chief Financial Officer James C. Cherry, Lead Independent Director Shawn J. Tibbetts, Chief Operating Officer George F. Allen, Independent Director Eric E. Apperson, President of Construction James A. Carroll, Independent Director Shelly R. Hampton, President of Asset Management Eva S. Hardy, Independent Director A. Russell Kirk, Director Dorothy S. McAuliffe, Independent Director John W. Snow, Independent Director ANALYST COVERAGE Bank of America Merrill Lynch Janney, Montgomery, & Scott LLC Robert W. Baird & Co. James Feldman Robert Stevenson David Rodgers (646) 855-5808 (646) 840-3217 (216) 737-7341 james.feldman@bofa.com robertstevenson@janney.com drodgers@rwbaird.com D. A. Davidson & Co. Raymond James & Associates Barry Oxford Bill Crow (212) 240-9871 (727) 567-2594 boxford@dadco.com bill.crow@raymondjames.com
HIGHLIGHTS 5 • Net income attributable to common stockholders and OP Unit holders of $11.2 million, or $0.14 per diluted share, compared to $6.0 million, or $0.08 per diluted share, for the three months ended June 30, 2019. • Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $22.0 million, or $0.28 per diluted share, compared to $19.1 million, or $0.27 per diluted share, for the three months ended June 30, 2019. See "Non-GAAP Financial Measures." • Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $22.6 million, or $0.29 per diluted share, compared to $21.2 million, or $0.30 per diluted share, for the three months ended June 30, 2019. • Issued updated 2020 full-year Normalized FFO guidance in the range of $1.09 to $1.13 per diluted share. 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 93.6% as of June 30, 2020 compared to 95.6% as of March 31, 2020. The Company's June 30, 2020 occupancy includes office at 97.0%, retail at 95.1%, and multifamily at 87.9%. Without the seasonal effect of the student housing properties, multifamily occupancy was 93.9% , which is higher than the sector's occupancy of 93.5% at March 31, 2020. • Positive releasing spreads on office lease renewals during the second quarter of 8.6% on a GAAP basis and 4.7% on a cash basis. Positive releasing spreads on retail lease renewals during the second quarter of 7.7% on a GAAP basis and 5.5% on a cash basis. • Collected 87% of portfolio rents for the second quarter, including 100% of office tenant rents, 99% of multifamily tenant rents, and 72% of retail tenant rents. See pages 27-28 for more details • .Collected 93% of portfolio rents for the month of July, including 100% of office tenant rents, 97% of multifamily tenant rents, and 86% of retail tenant rents. • Ended the second quarter with $193.7 million of third-party construction backlog. All third-party construction sites remain active and fully operational. • Sold a portfolio of seven unencumbered retail assets comprising over 630,000 square feet, or 15% of the Company's retail portfolio, for $90.0 million. • Terminated the 69,000 square foot lease with WeWork for the top two floors of the Wills Wharf office building at Harbor Point on the Baltimore waterfront. • Board of Directors declared third quarter cash dividend of $0.11 per common share payable on October 8, 2020 to stockholders of record on September 30, 2020. • Board of Directors declared cash dividend of $0.421875 per share on its Series A Cumulative Redeemable Perpetual Preferred Stock payable on October 15, 2020 to stockholders of record on October 1, 2020. • Student housing portfolio 95% pre-leased for the 2020-2021 academic year.
2020 OUTLOOK & ASSUMPTIONS 6 OUTLOOK LOW HIGH Total NOI $107.0M $108.9M Construction Segment Gross Profit $7.3M $8.0M G&A Expenses $12.9M $13.5M Mezzanine Interest Income $19.5M $20.0M Interest Expense $29.3M $30.3M Normalized FFO per diluted share $1.09 $1.13 GUIDANCE ASSUMPTIONS • Disposition of two unencumbered assets for $13M in cash proceeds at the end of the third quarter • Acquisition of Nexton Square and Edison Apartments in the third quarter • Assumes additional termination fees will be recognized in 2020 • An additional $1.5M of bad debt write offs for the remainder of 2020 • Interest expense is calculated based on Forward LIBOR Curve, which forecasts rates ending the year at 0.16% • Opportunistic use of the preferred stock ATM
SUMMARY INFORMATION 7 $ IN THOUSANDS, EXCEPT PER SHARE DATE Three months ended 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 OPERATIONAL METRICS Net income attributable to common stockholders and OP unit holders $11,178 $8,160 $7,215 $9,869 $5,992 Net income attributable to common stockholders and OP unit holders per diluted share $0.14 $0.11 $0.09 $0.13 $0.08 Rental properties Net Operating Income (NOI) 27,373 28,581 27,811 28,167 25,012 General contracting and real estate services gross profit 2,056 1,718 1,058 1,192 1,321 Adjusted EBITDA(1) 29,933 33,103 30,843 31,150 28,800 Funds From Operations (FFO) attributable to common stockholders and OP unit holders 22,046 22,252 22,500 21,706 19,137 FFO per diluted share attributable to common stockholders and OP unit holders $0.28 $0.29 $0.29 $0.29 $0.27 Normalized FFO attributable to common stockholders and OP unit holders 22,583 24,697 22,896 22,474 21,212 Normalized FFO per diluted share attributable to common stockholders and OP unit holders $0.29 $0.32 $0.30 $0.30 $0.30 Annualized dividend yield NA 8.22% 4.58% 4.64% 5.08% CAPITALIZATION Common shares outstanding 57,010 56,492 56,278 54,875 52,794 Operating Partnership units outstanding 21,273 21,273 21,273 21,167 21,178 Common shares and OP units outstanding 78,283 77,765 77,551 76,042 73,972 Market price per common share $9.95 $10.70 $18.35 $18.09 $16.55 Common equity capitalization(2) $778,916 $832,085 $1,423,061 $1,375,600 $1,224,237 Preferred equity capitalization 63,350 63,250 63,250 63,250 63,250 Total equity capitalization $842,266 $895,335 $1,486,311 $1,438,850 $1,287,487 Total debt(3) 956,726 1,016,293 960,819 951,891 956,068 Total capitalization 1,798,992 1,911,628 2,447,130 2,390,741 2,243,555 Less: cash (75,111) (52,788) (43,579) (47,606) (25,961) Total enterprise value $1,723,881 $1,858,840 $2,403,551 $2,343,135 $2,217,594 BALANCE SHEET METRICS Core debt / enterprise value 43.2% 45.0% 33.6% 33.4% 27.0% Core debt + preferred equity / enterprise value 46.8% 48.4% 36.2% 36.1% 29.8% Fixed charge coverage ratio 2.9x 2.8x 2.5x 2.7x 2.9x Core debt / Annualized core EBITDA 6.8x 6.5x 6.8x 6.6x 6.1x Core debt + preferred equity / Annualized core EBITDA 7.3x 7.0x 7.3x 7.2x 6.7x CORE PORTFOLIO OCCUPANCY Office(4) 97.0% 96.6% 96.6% 96.6% 94.6% Retail(4) 95.1% 96.1% 96.9% 96.8% 96.6% Multifamily(5) 87.9% (6) 93.7% 95.6% 95.8% 94.7% (6) Weighted Average(7) 93.6% 95.6% 96.5% 96.5% 95.6% (1) See definition on page 31. (2) Includes common shares and OP units. (3) Excludes GAAP adjustments. (4) Office and retail occupancy based on leased square feet as a % of respective total. (5) Multifamily occupancy based on occupied units as a % of total. (6) Includes impact of seasonality at the student housing properties. Without this effect of student housing, multifamily was 93.9% occupied for 2Q20. (7) Total occupancy weighted by annualized base rent.
NET ASSET VALUE COMPONENT DATA 8 $ IN THOUSANDS Stabilized Portfolio NOI (Cash)(1) Third-Party General Contracting and Real Estate Services Three months ended Annualized Trailing 12 Months 6/30/2020 6/30/2020 General Contracting Gross Profit $6,024 Stabilized Virginia Beach (VB) Town Center(1) Office(2) $3,410 $13,640 Non-Property Assets(4) Retail(2) 162 648 As of 6/30/2020 Multifamily 1,592 6,368 Cash and Retricted Cash $75,111 Total Stabilized VB Town Center NOI $5,164 $20,656 Accounts Receivable 28,461 Notes Receivable, Including Mezzanine Investments (5) 180,919 Stabilized Portfolio (Excludes VB Town Center)(1) Construction receivables, including retentions 42,787 Office(2) $2,805 $11,220 Acquired lease intangible assets, net 55,832 Retail 8,662 34,648 Other Assets 36,216 Multifamily 4,035 16,140 Total Non-Property Assets $419,326 Total Stabilized Portfolio (Excludes VB Town Center) $15,502 $62,008 Combined Stabilized Portfolio NOI $20,666 $82,664 Liabilities(4) As of 6/30/2020 Run Rate Adjustments(1) Mortgages and Notes Payable(5) $956,726 Signed Leases Not Yet Occupied or In Free Rent Period $1,015 $4,060 Accounts Payable and Accrued Liabilities 22,705 Net Dispositions Completed Intra-Quarter (1,351) (5,406) Construction Payables, Including Retentions 58,253 Deferred Rent 5,386 21,544 Other Liabilities 57,731 Total Run Rate Adjustments $5,050 $20,198 Total Liabilities $1,095,415 Total $25,716 $102,862 Preferred Equity Liquidation Value Non-Stabilized Portfolio and Development Pipeline (Cost Basis)(3) Series A Cumulative Redeemable Perpetual Preferred Stock $63,350 See page 18 for a list of properties As of 6/30/2020 Income Producing Properties $71,000 Common Equity Construction In Process 100,000 As of 6/30/2020 Land Held for Development 14,000 Total common shares outstanding 57,010 Other Assets 13,000 Total OP units outstanding 21,273 Total Non-Stabilized Development Portfolio 198,000 Total Common Shares & OP Units Outstanding 78,283 Redevelopment in Process 22,000 Total Non-Stabilized Redevelopment and Development Portfolio $220,000 (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 6/30/2020 12/31/2019 Assets (Unaudited) Real estate investments: Income producing property $1,431,527 $1,460,723 Held for development 13,607 5,000 Construction in progress 108,444 140,601 Accumulated depreciation (232,108) (224,738) Net real estate investments 1,321,470 1,381,586 Real estate investments held for sale - 1,460 Cash and cash equivalents 70,979 39,232 Restricted cash 4,132 4,347 Accounts receivable, net 28,461 23,470 Notes receivable, net 182,245 159,371 Construction receivables, including retentions, net 42,787 36,361 Construction contract costs and estimated earnings in excess of billings, net 333 249 Operating lease right-of-use assets, net 32,907 33,088 Finance lease right-of-use assets, net 23,837 24,130 Acquired lease intangible assets, net 55,832 68,702 Other assets 35,883 32,901 Total Assets $1,798,866 $1,804,897 Liabilities and Equity Indebtedness, net $953,753 $950,537 Accounts payable and accrued liabilities 22,705 17,803 Construction payables, including retentions 58,253 53,382 Billings in excess of costs and estimated earnings 9,320 5,306 Operating lease liabilities 41,550 41,474 Finance lease liabilities 17,928 17,903 Other liabilities 48,411 63,045 Total Liabilities 1,151,920 1,149,450 Total Equity 646,946 655,447 Total Liabilities and Equity $1,798,866 $1,804,897
SUMMARY INCOME STATEMENT 10 IN THOUSANDS, EXCEPT PER SHARE DATA Three months ended Six months ended 6/30/2020 6/30/2019 6/30/2020 6/30/2019 Revenues (Unaudited) Rental revenues $39,915 $36,378 $82,204 $67,287 General contracting and real estate services revenues 57,398 21,444 104,666 38,480 Total Revenues 97,313 57,822 186,870 105,767 Expenses Rental expenses 8,309 7,915 17,684 14,640 Real estate taxes 4,233 3,451 8,566 6,579 General contracting and real estate services expenses 55,342 20,123 100,892 36,409 Depreciation and amortization 13,777 13,505 28,056 23,409 Amortization of right-of-use assets - finance leases 146 85 293 85 General and administrative expenses 2,988 2,951 6,781 6,352 Acquisition, development and other pursuit costs 502 57 529 457 Impairment charges - - 158 - Total Expenses 85,297 48,087 162,959 87,931 Gain on real estate dispositions 2,776 - 2,776 - Operating Income 14,792 9,735 26,687 17,836 Interest income 4,412 5,593 11,638 10,912 Interest expense on indebtedness (6,999) (7,491) (14,958) (13,377) Interest expense on finance leases (228) (112) (457) (112) Change in fair value of interest rate derivatives (6) (1,933) (1,742) (3,396) Equity in income of unconsolidated real estate entities - - - 273 Unrealized credit loss release (provision) 117 - (260) - Other income (expense), net 286 4 344 64 Income before taxes 12,374 5,796 21,252 12,200 Income tax benefit (provision) (65) 30 192 140 Net Income $12,309 $5,826 $21,444 $12,340 Net income attributable to noncontrolling interest in investment entities 44 320 136 320 Preferred stock dividends (1,175) (154) (2,242) (154) Net income attributable to AHH and OP Unit holders $11,178 $5,992 $19,338 $12,506 Net income per diluted share and unit attributable to AHH and OP Unit holders $0.14 $0.08 $0.25 $0.18 Weighted Average Shares & Units - Diluted 77,941 71,232 77,806 69,584
(1) FFO, NORMALIZED FFO & AFFO 11 IN THOUSANDS, EXCEPT PER SHARE DATA Three months ended (Unaudited) 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 Funds From Operations Net income attributable to AHH and OP unit holders $11,178 $8,160 $7,215 $9,869 $5,992 Earnings per diluted share $0.14 $0.11 $0.09 $0.13 $0.08 Depreciation and amortization(2) 13,644 14,092 15,285 15,057 13,145 Gains on dispositions of operating real estate(3) (2,776) - - (3,220) - FFO $22,046 $22,252 $22,500 $21,706 $19,137 FFO per diluted share $0.28 $0.29 $0.29 $0.29 $0.27 Normalized FFO Acquisition, development & other pursuit costs 502 27 294 93 57 Loss on extinguishment of debt - - 30 - - Non cash GAAP Adjustments 29 682 399 145 85 Change in fair value of interest rate derivatives 6 1,736 (327) 530 1,933 Normalized FFO 22,583 24,697 22,896 22,474 21,212 Normalized FFO per diluted share $0.29 $0.32 $0.30 $0.30 $0.30 Adjusted FFO Non-cash stock compensation 421 1,030 274 323 327 Acquisition, development & other pursuit costs (502) (27) (294) (93) (57) Tenant improvements, leasing commissions, lease incentives (4) (728) (1,318) (1,065) (2,057) (841) Property related capital expenditures (2,316) (1,014) (2,426) (1,565) (1,983) Adjustment for loan modification and exit fees (614) (2,074) (1,860) (1,371) (1,238) Non-cash interest expense(5) 673 638 588 425 509 Cash ground rent payment - finance lease (241) (216) (216) (207) (112) GAAP Adjustments (6,295) (984) (958) (1,686) (1,422) AFFO $12,981 $20,732 $16,939 $16,243 $16,395 AFFO per diluted share $0.17 $0.27 $0.22 $0.22 $0.23 Weighted Average Common Shares Outstanding 56,668 56,398 55,581 53,463 52,451 Weighted Average Operating Partnership ("OP") Units Outstanding 21,273 21,273 21,181 21,080 18,781 Total Weighted Average Common Shares and OP Units Outstanding 77,941 77,671 76,762 74,543 71,232 (1) See definitions on pages 30-31. (2) Adjusted for the depreciation attributable to noncontrolling interests in consolidated investments. (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) Excludes development, redevelopment, and first-generation space. (5) Includes non-cash interest expense relating to indebtedness and interest expense on finance leases.
OUTSTANDING DEBT 12 $ IN THOUSANDS Debt Maturities & Principal Payments Effective Rate as Outstanding as of Debt Stated Rate of 6/30/2020 Maturity Date 2020 2021 2022 2023 2024 Thereafter 6/30/2020 Secured Notes Payable - Core Debt Hoffler Place L+3.24% 3.40% Jan-2021 - $30,896 $30,896 Southgate Square L+1.60% 1.76% Apr-2021 513 19,682 20,195 Encore Apartments 3.25% 3.25% Sep-2021 254 24,337 24,591 4525 Main Street 3.25% 3.25% Sep-2021 326 31,230 31,556 Red Mill West 4.23% 4.23% Jun-2022 225 465 10,386 11,076 Thames Street Wharf L+1.30% 1.81% (1) Jun-2022 - - 70,000 70,000 Hanbury Village 3.78% 3.78% Aug-2022 40 532 17,771 18,343 Marketplace at Hilltop 4.42% 4.42% Oct-2022 200 414 9,707 10,321 1405 Point L+2.25% 2.41% Jan-2023 - 714 754 51,532 53,000 Socastee Commons 4.57% 4.57% Jan-2023 55 115 120 4,223 4,513 Sandbridge Commons L+1.75% 1.91% Jan-2023 124 257 268 7,248 7,897 249 Central Park Retail L+1.60% 3.85% (1) Aug-2023 119 245 260 16,092 16,716 Fountain Plaza Retail L+1.60% 3.85% (1) Aug-2023 71 147 156 9,685 10,059 South Retail L+1.60% 3.85% (1) Aug-2023 52 107 114 7,066 7,339 One City Center L+1.85% 2.01% Apr-2024 304 628 659 691 22,734 25,016 Red Mill Central 4.80% 4.80% Jun-2024 87 175 175 175 1,838 2,450 Premier Apartments L+1.55% 1.71% Oct-2024 34 208 221 234 16,053 16,750 Red Mill South 3.57% 3.57% May-2025 153 315 327 338 351 4,502 5,986 Brooks Crossing Office L+1.60% 1.76% Jul-2025 341 830 845 860 875 11,874 15,625 Market at Mill Creek L+1.55% 1.71% Jul-2025 324 647 647 647 647 11,129 14,041 Johns Hopkins Village L+1.25% 4.19% (1) Aug-2025 475 988 1,031 1,075 1,116 46,650 51,335 North Point Center Note 2 7.25% 7.25% Sep-2025 66 140 151 162 174 1,468 2,161 Lexington Square 4.50% 4.50% Sep-2028 129 268 280 293 306 13,293 14,569 Red Mill North 4.73% 4.73% Dec-2028 51 105 110 116 121 3,842 4,345 Greenside Apartments 3.17% 3.17% Dec-2029 348 712 735 759 783 30,321 33,658 Smith's Landing 4.05% 4.05% Jun-2035 426 880 917 956 994 13,584 17,757 Liberty Apartments 5.66% 5.66% Nov-2043 146 304 322 341 361 12,549 14,023 The Cosmopolitan 3.35% 3.35% Jul-2051 399 819 847 876 906 39,462 43,309 Total - Secured Core Debt 5,262 116,160 116,803 103,369 47,259 188,674 577,527 Secured Notes Payable - Development Pipeline Summit Place L+3.24% 3.40% Jan-2021 - 32,289 32,289 Wills Wharf L+2.25% 2.41% Jun-2023 - - - 53,660 53,660 Premier Retail L+1.55% 1.71% Oct-2024 17 102 109 115 7,907 8,250 Total - Development Pipeline 17 32,391 109 53,775 7,907 94,199 Total Secured Notes Payable $5,279 $148,551 $116,912 $157,144 $55,166 $188,674 $671,726 Unsecured Core Debt Senior Unsecured Line of Credit L+1.30%-1.85% 1.76% Jan-2024 - - - - $80,000 $80,000 Senior Unsecured Term Loan L+1.25%-1.80% 1.71% Jan-2025 - - - - - 19,500 19,500 Senior Unsecured Term Loan L+1.25%-1.80% 2.05% - 4.57% (1) Jan-2025 - - - - - 185,500 185,500 Total - Unsecured Core Debt - - - - 80,000 205,000 285,000 Total Notes Payable excluding GAAP Adjustments $5,279 $148,551 $116,912 $157,144 $135,166 $393,674 $956,726 GAAP Adjustments (2,973) Total Notes Payable $953,753 (1) Includes debt subject to interest rate swap locks.
DEBT INFORMATION 13 $ IN THOUSANDS Debt Maturities $350,000 5.0% $300,000 4.0% $250,000 3.4% 3.1% 3.0% $200,000 2.8% 2.7% $150,000 1.9% 2.0% $100,000 1.0% $50,000 $0 0.0% 2020 2021 2022 2023 2024 Thereafter⁽¹⁾ Fixed-Rate Debt Variable-Rate Debt Weighted Average Interest Rate Total Debt Composition Interest Rate Cap Agreements Weighted Average Notional % of Debt Interest Rate Maturity Effective Date Maturity Date Strike Rate Amount Secured vs. Unsecured Debt July 2018 August 2020 2.50% $50,000 Unsecured Debt 29.8% 2.8% 4.3 Yrs December 2018 January 2021 2.75% 50,000 May 2019 June 2022 2.50% 100,000 Secured Debt 70.2% 3.0% 5.7 Yrs January 2020 February 2022 1.75% 100,000 Variable vs. Fixed-rate Debt March 2020 March 2022 1.50% 100,000 (1) Variable-rate Debt 39.4% 2.2% 2.9 Yrs July 2020 July 2023 0.50% 100,000 (2)(3) Fixed-rate Debt 60.6% 3.4% 6.9 Yrs Total Interest Rate Caps $500,000 Fixed-rate and Hedged Debt(2)(3) 100% Total 3.0% 5.3 Yrs Fixed-rate Debt(2)(3) $579,607 Fixed-rate and Hedged Debt $1,079,607 Total Debt $956,726 (3) % of Total Debt 100% (1) Excludes debt subject to interest rate swap locks. (2) Includes debt subject to interest rate swap locks. (3) Excludes GAAP adjustments.
(1) CORE DEBT TO CORE EBITDA 14 $ IN THOUSANDS Three months ended 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 Net income attributable to common stockholders and OP unit holders $11,178 $8,160 $7,215 $9,869 $5,992 Excluding: Depreciation and amortization(2) 13,644 14,092 15,285 15,057 13,145 Gain on operating real estate dispositions (2,776) - - (3,220) (3) - Income tax provision (benefit) 65 (257) (152) (199) (30) Interest expense(2) 6,904 7,805 8,359 8,624 7,348 Change in fair value of interest rate derivatives 6 1,736 (327) 530 1,933 Loss on extinguishment of debt - - 30 - - GAAP adjustments related to finance leases 158 160 159 166 85 Non-Recurring Bad Debt 450 - - - - Unrealized credit loss provision (release) (117) 377 - - - Non-cash stock compensation 421 1,030 274 323 327 Adjusted EBITDA(3) $29,933 $33,103 $30,843 $31,150 $28,800 Other adjustments: Development/Redevelopment(6) (1,085) (1,133) (1,010) (1,499) (2,183) (Less) Net Acquisitions/Dispositions completed intra-quarter (1,351) - - (226) (1,978) Core EBITDA $27,497 $31,970 $29,833 $29,425 $24,639 Total debt(5) $956,726 $1,016,293 $960,819 $951,891 $956,068 Adjustments to debt: (Less) Development/Redevelopment(6) (137,508) (127,650) (109,930) (122,597) (161,528) (Less) Net Acquisitions completed intra-quarter - - - - (170,476) (Less) Cash & restricted cash (75,111) (52,788) (43,579) (47,606) (25,961) Core Debt $744,107 $835,855 $807,310 $781,688 $598,103 Core Debt/Annualized Core EBITDA 6.8x 6.5x 6.8x 6.6x 6.1x (1) See definitions on page 31. (2) Adjusted for the depreciation and interest expense attributable to noncontrolling interests in consolidated investments and unconsolidated entities. (3) Excludes non-recurring items (4) 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. (5) Excludes GAAP Adjustments. (6) Includes the redevelopment of the Cosmopolitan apartments
CAPITALIZATION & FINANCIAL RATIOS 15 $ IN THOUSANDS AS OF JUNE 30, 2020 Debt % of Total Principal Balance Unsecured credit facility 8% $80,000 Unsecured term loans 21% 205,000 Equity Debt Mortgages payable 71% 671,726 4% Total debt $956,726 47% 12% 53% 11% Liquidation Value Preferred Equity Shares Per Share Total Liquidation Value 6.75% Series A Cumulative Redeemable 2,534 $25.00 $63,350 Perpetual Preferred Stock (NYSE: AHHPrA) Preferred Equity Unsecured Credit Facility Common Equity % of Total Shares/Units Stock Price Market Value Unsecured Term Loans Common stock (NYSE: AHH) 73% 57,010 $9.95 $567,250 Common units 27% 21,273 $9.95 211,666 Common Units Mortgages Payable Equity market capitalization 78,283 $778,916 Total capitalization $1,798,992 32% 37% Financial Ratios Debt Service Coverage Ratio(1) 3.2x Fixed Charge Coverage Ratio(2) 2.9x Net Debt to Adjusted EBITDA 8.0x 4% Core Debt to Core EBITDA 6.8x Core Debt + Preferred Equity to Core EBITDA 7.3x Debt/Market capitalization 53% Liquidity Unencumbered Properties Cash on hand $75,111 % of Total Properties 56% Availability under credit facility 20,000 % of Annualized Base Rent 36% Availability under construction loans 27,799 $122,910 (1) Reflects quarterly Adjusted EBITDA divided by total quarterly interest expense and required principal repayment (2) Reflects quarterly Adjusted EBITDA divided by total quarterly interest expense, required principal repayment, and preferred equity dividends
PROPERTY PORTFOLIO 16 AS OF JUNE 30, 2020 Net Rentable Square Feet (RSF)(1) Development/ Development/ Town Unencumbered Redevelopment Core Redevelopment ABR per Property Anchor Tenant(s) Location Center ABR Year Built Core Properties Properties Total Occupancy(2) Leased(2) ABR(3) Leased SF(3) Retail Properties 249 Central Park Retail Cheesecake Factory, Brooks Brothers Virginia Beach, VA ✓ - 2004 92,400 - 92,400 97.9% - $2,472,066 $27.33 Apex Entertainment Apex Entertainment, USI Virginia Beach, VA ✓ 100% 2002 - 103,335 103,335 - 100.0% 1,482,137 14.34 Broad Creek Shopping Center(6)(9) Food Lion, PetSmart Norfolk, VA 100% 1997/2001 121,504 - 121,504 96.7% - 2,099,146 17.86 Broadmoor Plaza Kroger South Bend, IN 100% 1980 115,059 - 115,059 97.5% - 1,387,237 12.36 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 - 91.0% 1,719,906 30.30 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% - 888,673 46.35 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 79.0% - 1,553,085 18.51 Fountain Plaza Retail Ruth's Chris, Ann Taylor Virginia Beach, VA ✓ - 2004 35,961 - 35,961 100.0% - 991,714 27.58 Greentree Shopping Center Various Small Shops Chesapeake, VA 100% 2014 15,719 - 15,719 92.6% - 320,556 22.02 Hanbury Village(6) Harris Teeter, Walgreens Chesapeake, VA 32% 2006/2009 116,635 - 116,635 100.0% - 2,551,482 21.88 Harrisonburg Regal Regal Cinemas Harrisonburg, VA 100% 1999 49,000 - 49,000 100.0% - 717,850 14.65 Lexington Square Lowes Foods Lexington, SC - 2017 85,440 - 85,440 98.3% - 1,808,867 21.53 Market at Mill Creek (6) Lowes Foods Mt. Pleasant, SC - 2018 80,405 - 80,405 95.8% - 1,765,248 22.91 Marketplace at Hilltop(6)(9) Total Wine, Panera, Chic-Fil-A Virginia Beach, VA - 2000/2001 116,953 - 116,953 100.0% - 2,660,994 22.75 North Hampton Market PetSmart, Hobby Lobby Taylors, SC 100% 2004 114,935 - 114,935 93.6% - 1,311,368 12.19 North Point Center(6) Harris Teeter, Home Depot, Costco Durham, NC 88% 1998/2009 494,746 - 494,746 100.0% - 3,827,845 7.74 Oakland Marketplace(6) Kroger Oakland, TN 100% 2004 64,538 - 64,538 100.0% - 481,402 7.46 Parkway Centre Publix Moultrie, GA 100% 2017 61,200 - 61,200 98.0% - 814,128 13.57 Parkway Marketplace Rite Aid Virginia Beach, VA 100% 1998 37,804 - 37,804 94.4% - 728,945 20.42 Patterson Place BB&B, PetSmart, DSW Durham, NC 100% 2004 160,942 - 160,942 81.1% - 2,151,435 16.49 Perry Hall Marketplace Safeway Perry Hall, MD 100% 2001 74,256 - 74,256 100.0% - 1,273,298 17.15 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 96.0% - 2,727,985 27.55 Red Mill Commons(6) Homegoods, Walgreens Virginia Beach, VA 8% 2000-2005 373,808 - 373,808 88.9% - 6,071,911 18.27 Sandbridge Commons(6) Harris Teeter Virginia Beach, VA - 2015 76,650 - 76,650 98.5% - 1,057,656 14.01 Socastee Commons Bi-Lo Myrtle Beach, SC - 2000/2014 57,273 - 57,273 100.0% - 652,520 11.39 Southgate Square Burlington, PetSmart, Michaels, Conn's Colonial Heights, VA - 1991/2016 260,131 - 260,131 92.2% - 3,295,406 13.73 South Retail lululemon, free people, CPK Virginia Beach, VA ✓ - 2002 38,515 - 38,515 100.0% - 997,051 25.89 South Square Ross, Petco, Office Depot Durham, NC 100% 1977/2005 109,590 - 109,590 98.1% - 1,875,689 17.45 Southshore Shops Buffalo Wild Wings Chesterfield, VA 100% 2006 40,307 - 40,307 78.8% - 671,952 21.16 Studio 56 Retail Rocket Mortgage 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 99.4% - 3,538,380 20.12 Total / Weighted Avg Retail Portfolio 58% 3,373,207 204,859 3,578,066 95.1% $57,776,311 $17.01
PROPERTY PORTFOLIO CONT. 17 AS OF JUNE 30, 2020 Net Rentable Square Feet (RSF)(1) Town Unencumbered Core Development Core Development Office Properties Anchor Tenant Location Center ABR Year Built Properties Properties Total Occupancy(2) Leased(2) ABR(3) ABR per Leased SF(3) 4525 Main Street Clark Nexsen, Anthropologie, Mythics Virginia Beach, VA ✓ - 2014 234,938 - 234,938 99.4% - $6,848,749 $29.33 Armada Hoffler Tower(4)(5) AHH, Troutman Sanders, Williams Mullen Virginia Beach, VA ✓ 100% 2002 320,680 - 320,680 94.9% - 8,785,342 28.86 Brooks Crossing Office Huntington Ingalls Industries Newport News, VA - 2019 98,061 - 98,061 100.0% - 1,850,411 18.87 One Columbus(5) BB&T, HBA Virginia Beach, VA ✓ 100% 1984 128,876 - 128,876 97.5% - 3,193,112 25.41 One City Center Duke University, WeWork Durham, NC - 2019 151,599 - 151,599 89.3% - 4,433,848 32.74 Thames Street Wharf(4) Morgan Stanley, JHU Medical Baltimore, MD - 2010 263,426 - 263,426 99.4% - 7,237,479 27.65 Two Columbus HBA Architects Virginia Beach, VA ✓ 100% 2009 108,459 - 108,459 100.0% - 2,794,129 25.76 Total / Weighted Average Office Portfolio 42% 1,306,039 - 1,306,039 97.0% $35,143,070 $27.73 Units/Beds Development/ Development/ Monthly Effective Town Unencumbered Core Redevelopment Total Core Redevelopment Rent per Occupied Multifamily Location Center ABR Year Built Properties Properties Units/Beds Occupancy (2) Occupancy(2) AQR (7) Unit/Beds 1405 Point(8)(9) Baltimore, MD - 2018 289 - 289 95.8% - $7,267,936 $2,186.50 Encore Apartments Virginia Beach, VA ✓ - 2014 286 - 286 89.5% - 4,177,194 1,359.76 Greenside Apartments Charlotte, NC - 2018 225 - 225 92.9% - 4,192,166 1,671.52 Liberty Apartments(8) Newport News, VA - 2013 197 - 197 91.8% - 2,669,728 1,230.61 Premier Apartments Virginia Beach, VA ✓ - 2018 131 - 131 97.7% - 2,460,457 1,601.86 Smith's Landing(9) Blacksburg, VA - 2009 284 - 284 96.8% - 4,767,645 1,444.74 The Cosmopolitan(8) Virginia Beach, VA ✓ - 2006 - 342 342 - 85.6% (11) 5,631,938 1,757.78 Multifamily Total - 1,412 342 1,754 93.9% 31,167,065 1,630.64 Hoffler Place(10) Charleston, SC - 2019 258 - 258 (12) 82.2% - 3,481,183 1,368.39 Johns Hopkins Village(8)(9)(10) Baltimore, MD - 2016 568 - 568 (12) 75.7% - 6,451,033 1,250.20 Student Housing Total - 826 0 826 77.7% 9,932,215 9,380.37 Total / Weighted Avg Multifamily Portfolio - 2,238 342 2,580 87.9% $41,099,280 $1,532.56 (1) The net rentable square footage for each of our retail & office properties is the sum of (a) the square footage of existing leases, plus (b) for available space, management’s estimate of net rentable square footage based, in part, on Square Footage past leases. The net rentable square footage included in office leases is generally consistent with the Building Owners Properties with Tenants Subject to Number of Leased Pursuant to and Managers Association, or BOMA, 1996 measurement guidelines. Ground Lease Ground Leases Ground Leases ABR (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 June 30, 2020, divided by (b) net rentable square feet, expressed as a percentage. Occupancy for our multifamily Columbus Village 1 3,403 200,000 properties is calculated as (a) total units occupied as of June 30, 2020, divided by (b) total units available, as of such Hanbury Village 2 55,586 1,082,118 date expressed as a percentage. Market at Mill Creek 1 7,014 63,000 (3) For the properties in our office and retail portfolios, annualized base rent, or ABR, is calculated by multiplying (a) Marketplace at Hilltop 1 4,211 149,996 monthly base rent (defined as cash base rent, before contractual tenant concessions and abatements, and excluding North Point Center 4 280,556 1,146,700 tenant reimbursements for expenses paid by us) as of June 30, 2020 for in-place leases as of such date by (b) 12, and Oakland Marketplace 1 45,000 186,347 does not give effect to periodic contractual rent increases or contingent rental revenue (e.g., percentage rent based on Red Mill Commons 8 33,961 773,639 tenant sales thresholds). ABR per leased square foot is calculated by dividing (a) ABR by (b) square footage under in- Sandbridge Commons 3 60,521 738,500 place leases as of June 30, 2020. In the case of triple net or modified gross leases, our calculation of ABR does not Tyre Neck Harris Teeter 1 48,859 533,285 include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses. Total / Weighted Avg 28 562,936 $5,523,403 (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 AQR for Liberty, Cosmopolitan, Johns Hopkins Village, Hoffler Place and 1405 Point excludes approximately consolidated financial statements. $0.3M, $0.8M, $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 June 30, in the table to the right. 2020 by the number of occupied beds. (7) For the properties in our multifamily portfolio, AQR is calculated by multiplying (a) revenue for the quarter ended (11) Occupancy calculation excludes 30 units that are offline for redevelopment. June 30, 2020 by (b) 4. (12) Student housing property that are leased by bed.
DEVELOPMENT & REDEVELOPMENT PIPELINE 18 $ IN THOUSANDS Schedule(1) Property (1) % Leased or Construction Initial Stabilized Estimated Loan Cost to Estimated (2) (1) AHH Ownership % Anchor Tenants Projects Type LOI Start Occupancy Operation Cost Commitment Date Under Development Summit Place (Meeting Street) Multifamily 357 beds 98% 3Q17 3Q20 4Q20 $56,000 $35,000 $55,000 90% NA Charleston, SC Wills Wharf Office 325,000 sf 47% 3Q18 2Q20 4Q21 120,000 76,000 104,000 100% Canopy by Hilton, EY Baltimore, MD Total Projects Under Development $176,000 $111,000 $159,000 Delivered Not Stabilized Premier Retail (Town Center Phase VI) Retail 39,000 sf 76% 4Q16 3Q18 3Q21 18,000 8,000 16,000 100% Williams-Sonoma, Pottery Barn Virginia Beach, VA Total Active Development $194,000 $119,000 $175,000 On Hold Chronicle Mill 238 units / (3) Multifamily - TBD TBD TBD TBD TBD 4,000 85% NA Belmont, NC 10,000 sf Southern Post 138 units / (3) Mixed-use - TBD TBD TBD TBD TBD 10,000 80% TBD Roswell, GA 137,000 sf Ten Tryon (3) Mixed-use 220,000 sf 38% TBD TBD TBD TBD TBD 9,000 80% Publix, Fortune 100 office tenant Charlotte, NC $23,000 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 finishes, new The Cosmopolitan cabinetry and flooring, energy efficient appliances, and LED Multifamily 95%(4) 30 units 1Q18 4Q21 1Q22 $14,000 $12,000 9% Virginia Beach, VA lighting; modernize resident clubhouse, business center, and leasing office. Reposition 62,000 SF center to better incorporate within Town Columbus Village I Center and add Virginia Beach Boulevard small shop frontage Mixed-use 95% 9,609 sf 2Q19 3Q20 4Q20 9,000 8,000 8% Virginia Beach, VA along with Shake Shack, Cava, Hand & Stone, European Wax Center , and new Barnes & Noble prototype. Apex Entertainment Building Revitalize 84,000 SF of big box retail space within Town Center (Former Dick's Sporting Goods) Mixed-use 100% 84,000 sf 1Q20 4Q20 1Q21 8,000 2,000 7% into a destination entertainment concept for a new to market Virginia Beach, VA tenant, Apex Entertainment. Total Projects Under Redevelopment $31,000 $22,000 8% Q2 2020 YTD Capitalized Interest $1,140 $2,688 Capitalized Overhead $595 $1,559 (1) Represents estimates that may change as the development and redevelopment process proceeds. (2) First fully-stabilized quarter. See same store definition on page 32. (3) Majority interest in joint venture with preferred return. (4) Occupancy calculation excludes 30 units that are offline for redevelopment.
MEZZANINE INVESTMENTS 19 $ IN THOUSANDS Schedule(1) Principal Property % Leased Initial Mezzanine Mezzanine Type Estimated(1) or LOI Occupancy Loan Maturity Interest Rate Financing Interest QTD Investments with Discounted Purchase Options Nexton Square-Phase I Mixed-use 118,000 sf 90% 3Q19 4Q20 10% $14,000 $405 Summerville, SC Short Term Investments Delray Plaza (Whole Foods)(2) Retail 83,000 sf 100% 3Q19 4Q20 15%(2) 12,000 - Delray Beach, FL The Residences at Annapolis Junction(2) Multifamily 416 units 95% 3Q17 4Q20 10%(2) 36,000 - Annapolis Junction, MD Solis Apartments at Interlock Multifamily 349 units NA 4Q20 3Q22 13% 23,000 838 Atlanta, GA The Interlock Mixed-use 300,000 sf 79% 4Q20 3Q22 15% 67,000 2,543 Atlanta, GA Total $152,000 $3,786 Mezzanine Interest Expense (792) Net Mezzanine Interest Income $2,994 The Interlock Solis Apartments Atlanta, GA Atlanta, GA (1) Represents estimates that may change as the development process proceeds (2) Stopped GAAP recognition of mezzanine income as of 4/1/20
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 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 Harris Teeter, Food Lion, Weis Retail Portfolio (7 properties) Mid-Atlantic 630,780 $90,000 $88,000 $2,776 7.8% 2Q20 Markets, Office Max 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 1,530,062 sf/ $329,750 $256,400 $65,888 7.2% 203 units (1) Contractual purchase price. (2) Value of OP Units/common stock at issuance. (3) Anchor tenant vacated 12/31/16, which would represent a 2.5% Cash Cap Rate. (4) Includes JV interest in the property.
CONSTRUCTION BUSINESS SUMMARY 21 $ IN THOUSANDS Total Contract Work in Place as Estimated Date Highlighted Projects Location Value of 6/30/2020 Backlog of Completion The Interlock Atlanta, GA $93,714 $71,686 $22,028 4Q 2020 27th Street Garage and Apartments Virginia Beach, VA 80,378 25,287 55,091 3Q 2021 Solis Apartments at Interlock Atlanta, GA 64,655 36,506 28,149 1Q 2021 Boulders Lakeside Apartments Chesterfield, VA 35,684 27,496 8,188 1Q 2021 Holly Springs Apartments Holly Springs, NC 34,755 1,834 32,921 3Q 2021 Sub Total 309,186 162,809 146,377 All Other Projects 307,788 260,423 47,365 Total $616,974 $423,232 $193,742 Gross Profit Summary Trailing 12 Q2 2020 Months (Unaudited) Revenue $57,398 $172,045 Expense (55,342) (166,021) Gross Profit $2,056 $6,024 The Interlock Atlanta, GA
SAME STORE NOI BY SEGMENT 22 $ IN THOUSANDS (RECONCILIATION TO GAAP LOCATED IN APPENDIX ON PG. 36) Three months ended Six months ended 6/30/2020 6/30/2019 $ Change % Change 6/30/2020 6/30/2019 $ Change % Change Office(1) (Unaudited) (Unaudited) Revenue $6,349 $6,642 ($293) -4.4% $10,459 $10,754 ($295) -2.7% Rental Expenses(2) 1,531 1,622 (91) -5.6% 2,692 2,695 (3) -0.1% Real Estate Taxes 695 577 118 20.5% 1,109 1,027 82 8.0% Net Operating Income $4,123 $4,443 ($320) -7.2% $6,658 $7,032 ($374) -5.3% Retail(1) Revenue $12,563 $13,273 ($710) -5.3% $25,620 $26,055 ($435) -1.7% Rental Expenses(2) 1,504 1,768 (264) -14.9% 3,246 3,523 (277) -7.9% Real Estate Taxes 1,404 1,297 107 8.2% 2,817 2,627 190 7.2% Net Operating Income $9,655 $10,208 ($553) -5.4% $19,557 $19,905 ($348) -1.7% Multifamily(1) Revenue $5,519 $5,924 ($405) -6.8% $10,524 $10,825 ($301) -2.8% Rental Expenses(2) 1,723 1,800 (77) -4.3% 3,237 3,335 (98) -2.9% Real Estate Taxes 472 438 34 7.8% 808 768 40 5.2% Net Operating Income $3,324 $3,686 ($362) -9.8% $6,479 $6,722 ($243) -3.6% Same Store Net Operating Income (NOI) $17,102 $18,337 ($1,235) -6.7% $32,694 $33,659 ($965) -2.9% GAAP Adjustments (4,723) (955) (3,768) (4,691) (1,127) (3,564) Same store portfolio NOI, cash basis excluding $4.3M of deferred rent in 2Q2020 $12,379 $17,382 ($5,003) -28.8% $28,003 $32,532 ($4,529) -13.9% NOI, Cash Basis(3) Office $3,704 $3,709 ($5) -0.1% $6,402 $6,327 $75 1.2% Retail 5,573 10,111 (4,538) -44.9% 15,386 19,708 (4,322) -21.9% Multifamily 3,102 3,562 (460) -12.9% 6,215 6,497 (282) -4.3% $12,379 $17,382 ($5,003) -28.8% $28,003 $32,532 ($4,529) -13.9% NOI: Office $4,123 $4,443 ($320) -7.2% $6,658 $7,032 ($374) -5.3% Retail 9,655 10,208 (553) -5.4% 19,557 19,905 (348) -1.7% Multifamily 3,324 3,686 (362) -9.8% 6,479 6,722 (243) -3.6% $17,102 $18,337 ($1,235) -6.7% $32,694 $33,659 ($965) -2.9% (1) See page 33 for Same Store vs. Non – Same Store Properties. (2) Excludes expenses associated with the Company’s in-house asset management division of $0.3M and $0.5M for the 3 months ended 6/30/2020 & 6/30/2019, respectively and $0.7M and $0.8M for the months ended 6/30/20 & 6/30/19, respectively.
(1) TOP 10 TENANTS BY ABR 23 $ IN THOUSANDS AS OF JUNE 30, 2020 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 $ 5,879 16.7% 4.4% Clark Nexsen 1 2029 2,639 7.5% 2.0% WeWork 1 2034 2,259 6.4% 1.7% Duke University 1 2029 1,579 4.5% 1.2% Huntington Ingalls 1 2029 1,544 4.4% 1.2% Mythics 1 2030 1,211 3.4% 0.9% Johns Hopkins Medicine 1 2023 1,149 3.3% 0.9% Pender & Coward 1 2030 926 2.6% 0.7% Kimley-Horn 1 2027 894 2.5% 0.7% Troutman Sanders 1 2025 889 2.5% 0.7% Top 10 Total $ 18,969 53.8% 14.4% 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 6 2020 - 2035 $ 3,476 6.0% 2.6% Lowes Foods 2 2037 ; 2039 1,976 3.4% 1.5% Bed, Bath, & Beyond 4 2022 ; 2025 1,751 3.0% 1.3% Regal Cinemas 2 2022 - 2024 1,713 3.0% 1.3% PetSmart 5 2022 - 2025 1,461 2.5% 1.1% Petco 4 2022 - 2030 892 1.5% 0.7% Total Wine & More 2 2024 - 2027 765 1.3% 0.6% Ross Dress for Less 2 2022 - 2025 762 1.3% 0.6% TJ Maxx/HomeGoods 3 2022 ; 2025 748 1.3% 0.6% Safeway 1 2021 718 1.2% 0.5% Top 10 Total $ 14,262 24.5% 10.8% (1) Includes leases from the development and redevelopment properties that have been delivered, but not stabilized.
LEASE SUMMARY 24 OFFICE Renewal Lease Summary GAAP Cash Number of Weighted Leases Net Rentable SF Leases Net Rentable Contractual Prior Rent Releasing Contractual Prior Rent Releasing Average Lease TI & LC Quarter Signed Signed Expiring SF Expiring Rent per SF per SF Spread Rent per SF per SF Spread Term (yrs) TI & LC per SF Q2 2020 3 11,529 1 1,485 $33.09 $30.47 8.6% $33.72 $32.20 4.7% 5.00 $70,249 $6.09 Q1 2020 1 17,194 4 7,373 32.77 30.32 8.1% 29.75 31.40 -5.3% 8.00 1,004,346 58.41 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 New Lease Summary(1) Number of Cash Weighted Leases Net Rentable SF Contractual Average TI & LC Quarter Signed Signed Rent per SF Lease Term TI & LC per SF Q2 2020 - - $0.00 - $0 $0.00 Q1 2020 1 3,186 26.50 5.00 112,578 35.34 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 RETAIL Renewal Lease Summary GAAP Cash Number of Net Weighted Leases Rentable SF Net Rentable SF Contractual Prior Rent per Releasing Contractual Prior Rent Releasing Average Lease TI & LC Quarter Signed Signed Leases Expiring Expiring Rent per SF SF Spread Rent per SF per SF Spread Term (yrs) TI & LC per SF Q2 2020 14 42,605 8 19,153 $22.15 $20.57 7.7% $22.10 $20.95 5.5% 4.39 $41,889 $0.98 Q1 2020 3 35,767 16 158,218 13.11 12.98 1.0% 13.15 13.00 1.1% 4.81 74,321 2.08 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 New Lease Summary(1) Number of Net Cash Weighted Leases Rentable SF Contractual Average Lease TI & LC Quarter Signed Signed Rent per SF Term (yrs) TI & LC per SF Q2 2020 1 1,440 $18.00 5.33 $5,505 $3.82 Q1 2020 7 13,073 18.33 5.24 184,426 14.11 Q4 2019 12 72,921 17.50 10.02 3,207,564 43.99 Q3 2019 5 14,720 20.60 9.60 733,422 49.82
OFFICE LEASE EXPIRATIONS 25 AS OF JUNE 30, 2020 % Portfolio Net % of Portfolio Annualized Base Number of Leases Square Footage of Rentable Square Annualized Base Annualized Base Rent per Leased Year Expiring Leases Expiring Feet Rent Rent Square Foot Available - 38,819 3.0% $ - - $ - M-T-M 2 - - 2,400 - - 2020 6 17,117 1.3% 537,734 1.5% 31.42 2021 12 48,532 3.7% 1,365,209 3.9% 28.13 2022 9 47,077 3.6% 1,261,736 3.6% 26.80 2023 12 103,647 7.9% 2,757,301 7.8% 26.60 2024 10 134,075 10.3% 3,255,474 9.3% 24.28 2025 18 142,129 10.9% 4,198,181 11.9% 29.54 2026 8 36,863 2.8% 926,963 2.6% 25.15 2027 5 254,819 19.5% 7,301,882 20.8% 28.66 2028 7 69,036 5.3% 1,984,640 5.6% 28.75 2029 7 242,709 18.6% 6,211,755 17.7% 25.59 2030 6 107,801 8.3% 3,043,135 8.7% 28.23 Thereafter 2 63,415 4.8% 2,296,660 6.6% 36.22 Total / Weighted Average 104 1,306,039 100.0% $ 35,143,070 100.0% $ 27.73 300,000 25.0% Square Feet % of Portfolio 250,000 20.0% Under Lease ABR 2,500 or less 3% 200,000 15.0% 2,501-10,000 14% 150,000 10,001-20,000 16% 10.0% 20,001-40,000 21% 100,000 40,001-100,000 30% 5.0% 50,000 Greater than 100,000 16% - 0.0% Office Portfolio Total 100% Leased Square Feet % ABR of Office Portfolio
RETAIL LEASE EXPIRATIONS 26 AS OF JUNE 30, 2020 % Portfolio Net % of Portfolio Annualized Base Number of Leases Square Footage of Rentable Square Annualized Base Annualized Base Rent per Leased Year Expiring Leases Expiring(1) Feet Rent(1) Rent Square Foot Available - 181,182 5.1% $ - - $ - M-T-M 1 1,400 - 25,550 - 18.25 2020 22 143,571 4.0% 1,994,777 3.5% 13.89 2021 73 296,945 8.3% 5,777,248 10.0% 19.46 2022 78 451,450 12.6% 7,551,024 13.1% 16.73 2023 67 444,007 12.4% 7,239,172 12.5% 16.30 2024 69 391,926 11.0% 6,844,146 11.8% 17.46 2025 67 571,078 16.0% 7,819,623 13.5% 13.69 2026 28 170,435 4.8% 3,459,951 6.0% 20.30 2027 18 108,715 3.0% 2,545,423 4.4% 23.41 2028 20 91,451 2.6% 1,374,372 2.4% 15.03 2029 20 96,952 2.7% 1,910,083 3.3% 19.70 2030 16 95,010 2.7% 2,176,487 3.8% 22.91 Thereafter 23 533,944 14.9% 9,058,454 15.7% 16.97 Total / Weighted Average 502 3,578,066 100.0% $ 57,776,310 100.0% $ 17.01 600,000 18.0% 16.0% 500,000 Square Feet 14.0% Under Lease % of Portfolio ABR 400,000 12.0% 2,500 or less 15% 10.0% 300,000 2,501-10,000 33% 8.0% 10,001-20,000 14% 200,000 6.0% 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.
COVID-19 OVERALL COLLECTIONS 27 AS OF JULY 31, 2020 2Q20 COLLECTIONS (3) COLLECTIONS BY MONTH(1)(2) TENANT BASE DEFERRED OR COLLECTION RENT + CAM COLLECTED EXPECTED WRITTEN OFF OR ABATED Period $ $ % $ % $ % April 12,465 10,568 85% 1,567 13% 330 2% 11% May 12,367 10,634 86% 1,474 12% 259 2% 2% June 12,469 11,165 90% 1,079 9% 225 1% 87% 2Q20 37,301 32,367 87% 4,120 11% 814 2% July To Date 12,647 11,742 93% 905 7% - - COLLECTIONS BY SECTOR(1)(2) Collected OFFICE MULTIFAMILY RETAIL TOTAL Period $ % $ % $ % $ % April 3,258 100% 3,557 99% 3,753 67% 10,568 85% May 3,274 100% 3,439 99% 3,922 70% 10,635 86% June 3,279 100% 3,531 99% 4,355 78% 11,165 90% Written Off or Abated 2Q20 9,811 100% 10,527 99% 12,030 72% 32,368 87% July To Date 3,293 100% 3,728 97% 4,721 86% 11,742 93% 2Q20 TOP 20 COLLECTIONS BY STATUS(1)(2) COLLECTIONS (3) TENANT BASE DEFERRED OR COLLECTION RENT + CAM COLLECTED EXPECTED WRITTEN OFF OR ABATED Period $ $ % $ % $ % Office 9,833 9,810 100% 23 0% - 0% Multifamily 10,654 10,528 99% 20 0% 107 1% Retail 16,814 12,029 72% 4,078 24% 707 4% 7% 1% 2Q20 37,301 32,367 87% 4,121 11% 814 2% 92% (1) Data reported relates to rent charges and collections through 7/31/2020 and does not correspond to the reporting segment classification of the properties as a whole. (2) Excludes $1.7M of tenant base rent + CAM from the seven-property portfolio sold in 2Q20 and $262k of bad debt tied to non-COVID related receivable write-offs. (3) As a percentage of 2Q20 rent and recovery charges.
COVID-19 RETAIL 2Q20 COLLECTIONS (1)(2) 28 AS OF JULY 31, 2020 DEFERRED OR WRITTEN OFF OR AMOUNT AMOUNT OF CATEGORY COLLECTED STATUS TENANTS (3) COLLECTION EXPECTED ABATED DEFERRED DEFERRAL % National 71% 27% 3% Paid in Full 314 - 0% Local/Regional 73% 19% 8% Granted Deferral 167 3,300 81% Negotiating Deferral 32 648 16% Anchor 84% 16% 0% Collection Expected 16 129 3% Junior Anchor 75% 24% 1% TOTAL 529 $4,078 100% In-Line / Outparcel 66% 27% 7% TENANT OPERATING TOP 20 TENANTS (4) TENANT TYPE (4) T E N A N T M I X (4) STATUS (4) 17% 55% 6% 20% 30% 79% 70% 55% 28% 39% 1% Collected National Anchor Open Written Off or Abated (1) Data reported relates to rent charges and collections through 7/31/2020 and does not correspond to the reporting segment classification of the properties as a whole. (2) Excludes tenant base rent + CAM from the seven-property portfolio sold in 2Q20 and bad debt tied to non-COVID related receivable write-offs. (3) Excludes rent collected since 6/30/2020 (4) As a percentage of 2Q20 rent and recovery charges.
29 APPENDIX DEFINITIONS & RECONCILIATIONS Town Center Virginia Beach, VA
DEFINITIONS 30 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, provision for unrealized credit losses, amortization of right-of-use assets attributable to finance leases, severance related costs, and other non-comparable items. Management believes that the computation of FFO in accordance 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 31 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 pipeline projects that are still in lease-up. We generally consider a property to be in lease-up until the earlier of (i) the quarter after which the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy. Management believes that Core EBITDA provides useful supplemental information to investors regarding our ongoing operating performance as it provides a consistent comparison of our operating performance across time periods and allows investors to more easily compare our operating results with other REITs. However, other REITs may use different methodologies for calculating Core EBITDA or similarly entitled measures and, accordingly, our Core EBITDA may not always be comparable to Core EBITDA or other similarly entitled measures of other REITs. CORE DEBT: We calculate Core Debt as our total debt, excluding loans associated with our development pipeline, cash & cash equivalents, and restricted cash.
DEFINITIONS 32 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.
SAME STORE VS. NON - SAME STORE PROPERTIES 33 Three Months Ended Six Months Ended Three Months Ended Six Months Ended 6/30/2020 to 2019 6/30/2020 to 2019 6/30/2020 to 2019 6/30/2020 to 2019 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 Socastee Commons X X Apex Entertainment X X South Retail X X Broad Creek Shopping Center X X South Square X X Broadmoor Plaza X X Southgate Square X X Brooks Crossing (Retail) X X Southshore Shops X X Columbus Village X X Studio 56 Retail X X Columbus Village II X X Tyre Neck Harris Teeter X X Commerce Street Retail X X Wendover Village X X Courthouse 7-Eleven X X Wendover Village II X X Dimmock Square X X Wendover Village III X X Fountain Plaza Retail X X Office Properties Greentree Shopping Center X X 4525 Main Street X X Hanbury Village X X Armada Hoffler Tower X X Harrisonburg Regal X X Brooks Crossing (Office) X X Lexington Square X X One City Center X X Market at Mill Creek X X One Columbus X X Marketplace at Hilltop X X Thames Street Wharf X X North Hampton Market X X Two Columbus X X North Point Center X X Multifamily Properties Oakland Marketplace X X 1405 Point X X Parkway Centre X X Encore Apartments X X Parkway Marketplace X X Greenside Apartments X X Patterson Place X X Hoffler Place X X Perry Hall Marketplace X X Johns Hopkins Village X X Premier Retail X X Liberty Apartments X X Providence Plaza X X Premier Apartments X X Red Mill Commons X X Smith’s Landing X X Sandbridge Commons X X The Cosmopolitan X X
RECONCILIATION TO PROPERTY PORTFOLIO NOI 34 $ IN THOUSANDS Three months ended 6/30 Six months ended 6/30 2020 2019 2020 2019 Office Same Store(1) Rental revenues $6,349 $6,642 $10,459 $10,754 Property expenses 2,226 2,199 3,801 3,722 NOI 4,123 4,443 6,658 7,032 Non-Same Store NOI(2) 2,852 433 6,817 1,388 Segment NOI $6,975 $4,876 $13,475 $8,420 Retail Same Store(1) Rental revenues $12,563 $13,273 $25,620 $26,055 Property expenses 2,908 3,065 6,063 6,150 NOI 9,655 10,208 19,557 19,905 Non-Same Store NOI(2) 4,594 4,274 9,917 7,423 Segment NOI $14,249 $14,482 $29,474 $27,328 Multifamily Same Store(1) Rental revenues $5,519 $5,924 $10,524 $10,825 Property expenses 2,195 2,238 4,045 4,103 NOI 3,324 3,686 6,479 6,722 Non-Same Store NOI(2) 2,825 1,968 6,526 3,598 Segment NOI $6,149 $5,654 $13,005 $10,320 Total Property Portfolio NOI $27,373 $25,012 $55,954 $46,068 (1) See page 33 for the Same Store vs. Non-Same Store properties (2) Includes expenses associated with the Company’s in-house asset management division.
RECONCILIATION TO PROPERTY PORTFOLIO NOI 35 $ IN THOUSANDS Three months ended 6/30/2020 Diversified Portfolio Office Retail Multifamily Total NOI - Cash Basis $2,805 $8,662 $4,035 $15,502 GAAP Adjustments 444 3,958 377 4,779 Elimination of intercompany rent (72) - - (72) NOI $3,177 $12,620 $4,412 $20,209 Town Center of Virginia Beach NOI - Cash Basis $3,410 $162 $1,592 $5,164 GAAP Adjustments 215 1,263 145 1,623 Elimination of intercompany rent (382) - - (382) NOI $3,243 $1,425 $1,737 $6,405 NOI Diversified Portfolio $3,177 $12,620 $4,412 $20,209 Town Center of Virginia Beach 3,243 1,425 1,737 6,405 Unstabilized Properties 555 204 - 759 Total Property Portfolio NOI $6,975 $14,249 $6,149 $27,373
RECONCILIATION TO GAAP NET INCOME 36 $ IN THOUSANDS Three months ended 6/30/2020 Total Rental General Contracting & Office Retail Multifamily Properties Real Estate Services Total Segment revenues $ 10,494 $ 18,714 $ 10,707 $ 39,915 $ 57,398 $ 97,313 Segment expenses 3,519 4,465 4,558 12,542 55,342 67,884 Net operating income $ 6,975 $ 14,249 $ 6,149 $ 27,373 $ 2,056 $ 29,429 Depreciation and amortization (13,777) General and administrative expenses (2,988) Acquisition, development and other pursuit costs (502) Gain on real estate dispositions 2,776 Interest income 4,412 Interest expense (6,999) Interest expense - finance leases (228) Change in fair value of interest rate derivatives (6) Other income 286 Non cash GAAP adjustments (29) Income tax provision (65) Net income $ 12,309 Net loss attributable to noncontrolling interest in investment entities 44 Preferred stock dividends (1,175) Net income attributable to AHH and OP unit holders $ 11,178 Six months ended 6/30/2020 Total Rental General Contracting & Office Retail Multifamily Properties Real Estate Services Total Segment revenues $ 20,686 $ 39,125 $ 22,393 $ 82,204 $ 104,666 $ 186,870 Segment expenses 7,211 9,651 9,388 26,250 100,892 127,142 Net operating income $ 13,475 $ 29,474 $ 13,005 $ 55,954 $ 3,774 $ 59,728 Depreciation and amortization (28,056) General and administrative expenses (6,781) Acquisition, development and other pursuit costs (529) Impairment charges (158) Gain on real estate dispositions 2,776 Interest income 11,638 Interest expense (14,958) Interest expense - finance leases (457) Change in fair value of interest rate derivatives (1,742) Non cash GAAP adjustments (553) Other income 344 Income tax benefit 192 Net income $ 21,444 Net loss attributable to noncontrolling interest in investment entities 136 Preferred stock dividends (2,242) Net income attributable to AHH and OP Unitholders $ 19,338