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): November 5, 2020
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
, | |||||
, | |||||
(Address of principal executive offices) | (Zip Code) | ||||
Registrant’s telephone number, including area code: (757 ) 366-4000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On November 5, 2020, Armada Hoffler Properties, Inc. (the “Company”) issued a press release announcing its financial position as of September 30, 2020, results of operations for the three months ended September 30, 2020, and other related information. Also on November 5, 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 September 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: November 5, 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 THIRD QUARTER 2020 RESULTS
Net Income of $0.11 Per Diluted Share
Normalized FFO of $0.24 Per Diluted Share
Updated 2020 Full-Year Normalized FFO Guidance
VIRGINIA BEACH, VA, November 5, 2020 – Armada Hoffler Properties, Inc. (NYSE: AHH) today announced its results for the quarter ended September 30, 2020 and provided an update on current events and the impact of COVID-19.
Third Quarter and Recent Highlights:
• | Net income attributable to common stockholders and OP Unit holders of $8.7 million, or $0.11 per diluted share, compared to $9.9 million, or $0.13 per diluted share, for the three months ended September 30, 2019. |
• | Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $19.2 million, or $0.24 per diluted share, compared to $21.7 million, or $0.29 per diluted share, for the three months ended September 30, 2019. See "Non-GAAP Financial Measures." |
• | Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $19.0 million, or $0.24 per diluted share, compared to $22.5 million, or $0.30 per diluted share, for the three months ended September 30, 2019. |
• | Recaptured two prime redevelopment sites - 3 acres in the Town Center of Virginia Beach and nearly 10 acres adjacent to James Madison University in Harrisonburg, Virginia - after terminating leases with Regal Cinemas upon tenant default. Excluding one-time charges of $1.1 million associated with these early terminations, Normalized FFO for the third quarter would have been $0.26 per diluted share. |
• | Updated 2020 full-year Normalized FFO guidance to $1.10 to $1.12 per diluted share from $1.09 to $1.13 per diluted share. |
• | Core operating property portfolio occupancy at 95.4% as of September 30, 2020 compared to 93.6% as of June 30, 2020. The Company's September 30, 2020 occupancy includes office at 96.7%, retail at 94.2%, and multifamily at 95.9%. |
• | Positive releasing spreads on lease renewals during the third quarter of 3.6% on a GAAP basis and 5.1% on a cash basis. |
• | Collected 96% of portfolio rents for the third quarter, including 100% of office tenant rents, 98% of multifamily tenant rents, and 93% of retail tenant rents. Refer to pages 27-28 of the Supplemental Financial Package for further details. |
• | Collected 96% of October portfolio rents, including 100% of office tenant rents, 97% of multifamily tenant rents, and 94% of retail tenant rents. |
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• | Announced a new development project, Solis Gainesville, a $52 million 223-unit multifamily project in downtown Gainesville, Georgia. |
• | Ended the third quarter with $122.7 million of third-party construction backlog. |
• | Acquired Nexton Square, a 118,000 square foot open air lifestyle center in Summerville, South Carolina in an off-market transaction. |
• | Acquired partner's 20% ownership interest of the Southern Post project in Roswell, Georgia resulting in 100% ownership of the partnership. |
• | Raised $86.3 million of net proceeds before offering expenses through an underwritten public offering of 3,600,000 shares of 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock at a public offering price of $24.75 per share. |
• | Completed the acquisition of the Edison Apartments in downtown Richmond, Virginia in an off-market, OP Unit transaction. |
• | Completed the off-market acquisition of The Residences at Annapolis Junction, a 416-unit, Class A, LEED Gold certified mid-rise apartment community in Howard County, Maryland. |
“Despite the uncertainty over the last several months, the strength of both our Company and our tenants are demonstrated by portfolio collection rates exceeding 96%,” said Louis Haddad, President & CEO. “In addition to our sustained level of high rent collections, we’re pleased with the steps we’ve taken towards repositioning the Company for long-term value creation and growth. This management team has guided our Company through the previous four economic recessions. Each time, we emerged stronger than before. If history is any indication, we'll successfully navigate the current downturn and emerge as one of the country's strongest small cap REITs.”
Financial Results
Net income attributable to common stockholders and OP Unit holders for the third quarter decreased to $8.7 million compared to $9.9 million for the third quarter of 2019. The period-over-period change was primarily due to decreased operating income from the property portfolio as a result of the disposition of operating properties 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. Additionally, the gain on real estate dispositions for the third quarter of 2020 decreased as compared to the third quarter of 2019. These decreases were partially offset by property acquisitions and the completion of development projects.
Normalized FFO attributable to common stockholders and OP Unit holders for the third quarter decreased to $19.0 million compared to $22.5 million for the third quarter of 2019. FFO attributable to common stockholders and OP Unit holders for the third quarter decreased to $19.2 million compared to $21.7 million for the third quarter of 2019. The period-over-period changes in Normalized FFO and FFO were negatively impacted by property dispositions 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. These increases in Normalized FFO and FFO were partially offset by property acquisitions and completion of development projects
Operating Performance
At the end of the third quarter, the Company’s office, retail and multifamily core operating property portfolios were 96.7%, 94.2% and 95.9% occupied, respectively.
Total construction contract backlog was $122.7 million at the end of the third quarter.
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Balance Sheet and Financing Activity
As of September 30, 2020, the Company had $885.4 million of total debt outstanding, including $205.0 million outstanding under its senior unsecured term loan facility. The Company had no balance outstanding under its revolving credit facility as of September 30, 2020. The borrowing capacity under the revolving credit facility was $125.0 million as of September 30, 2020. Total debt outstanding excludes unamortized GAAP fair value adjustments and deferred financing costs. Approximately 63% of the Company’s debt had fixed interest rates or was subject to interest rate swaps as of September 30, 2020. After giving effect to LIBOR interest rate caps with strike prices at or below 275 basis points as of September 30, 2020, 100% of the Company’s debt was either fixed or hedged.
The Company has no loans scheduled to mature during the remainder of 2020, and $163.0 million of loans scheduled to mature in 2021.
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 $1.10 to $1.12 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 | $108.2M | $109.6M | ||||||
Construction Segment Gross Profit | $7.4M | $7.8M | ||||||
G&A Expenses | $12.7M | $13.3M | ||||||
Mezzanine Interest Income | $19.8M | $20.2M | ||||||
Interest Expense | $30.0M | $30.5M | ||||||
Normalized FFO per diluted share [2] | $1.10 | $1.12 | ||||||
[1] Includes the following assumptions:
• | Disposition of two unencumbered assets for $8M in cash proceeds at the end of the fourth quarter |
• | Acquisition of Annapolis Junction and Edison Apartments in the fourth quarter |
• | An additional $0.5M of potential 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% |
[2] Normalized FFO excludes certain items, including debt extinguishment losses, acquisition, development and other pursuit costs, 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. See "Non-GAAP Financial Measures." The Company does not provide a reconciliation for its guidance range of Normalized FFO per diluted share to net income per diluted share, the most directly comparable forward-looking GAAP financial measure, because it is unable to provide a meaningful or accurate estimate of reconciling items and the information is not available without unreasonable effort as a result of the inherent difficulty of forecasting the timing and/or amounts of various items that would impact net income per diluted share. For the same reasons, the Company is unable to address the probable significance of the unavailable information and believes that providing a reconciliation for its guidance range of Normalized FFO per diluted share would imply a degree of precision for its forward-looking net income per diluted share that could be misleading to investors.
Supplemental Financial Information
Further details regarding operating results, properties and leasing statistics can be found in the Company’s supplemental financial package available at www.ArmadaHoffler.com.
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Webcast and Conference Call
The Company will host a webcast and conference call on Thursday, November 5, 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 Saturday, December 5, 2020 by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13711003.
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, the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, and the other documents filed by the Company with the Securities and Exchange Commission (the “SEC”) 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 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. The Company expressly disclaims any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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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)
September 30, 2020 | December 31, 2019 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Real estate investments: | ||||||||
Income producing property | $ | 1,531,910 | $ | 1,460,723 | ||||
Held for development | 13,607 | 5,000 | ||||||
Construction in progress | 60,810 | 140,601 | ||||||
1,606,327 | 1,606,324 | |||||||
Accumulated depreciation | (241,859 | ) | (224,738 | ) | ||||
Net real estate investments | 1,364,468 | 1,381,586 | ||||||
Real estate investments held for sale | — | 1,460 | ||||||
Cash and cash equivalents | 73,579 | 39,232 | ||||||
Restricted cash | 5,645 | 4,347 | ||||||
Accounts receivable, net | 26,465 | 23,470 | ||||||
Notes receivable, net | 168,716 | 159,371 | ||||||
Construction receivables, including retentions, net | 43,324 | 36,361 | ||||||
Construction contract costs and estimated earnings in excess of billings, net | 215 | 249 | ||||||
Operating lease right-of-use assets | 32,818 | 33,088 | ||||||
Finance lease right-of-use assets | 23,691 | 24,130 | ||||||
Acquired lease intangible assets, net | 57,958 | 68,702 | ||||||
Other assets | 44,393 | 32,901 | ||||||
Total Assets | $ | 1,841,272 | $ | 1,804,897 | ||||
LIABILITIES AND EQUITY | ||||||||
Indebtedness, net | $ | 886,509 | $ | 950,537 | ||||
Accounts payable and accrued liabilities | 20,667 | 17,803 | ||||||
Construction payables, including retentions | 55,825 | 53,382 | ||||||
Billings in excess of construction contract costs and estimated earnings | 7,085 | 5,306 | ||||||
Operating lease liabilities | 41,589 | 41,474 | ||||||
Finance lease liabilities | 17,941 | 17,903 | ||||||
Other liabilities | 60,219 | 63,045 | ||||||
Total Liabilities | 1,089,835 | 1,149,450 | ||||||
Total Equity | 751,437 | 655,447 | ||||||
Total Liabilities and Equity | $ | 1,841,272 | $ | 1,804,897 | ||||
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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(Unaudited) | ||||||||||||||||
Revenues | ||||||||||||||||
Rental revenues | $ | 39,636 | $ | 42,220 | $ | 121,840 | $ | 109,507 | ||||||||
General contracting and real estate services revenues | 58,617 | 27,638 | 163,283 | 66,118 | ||||||||||||
Total revenues | 98,253 | 69,858 | 285,123 | 175,625 | ||||||||||||
Expenses | ||||||||||||||||
Rental expenses | 10,223 | 9,873 | 27,907 | 24,513 | ||||||||||||
Real estate taxes | 4,760 | 4,180 | 13,326 | 10,759 | ||||||||||||
General contracting and real estate services expenses | 56,509 | 26,446 | 157,401 | 62,855 | ||||||||||||
Depreciation and amortization | 14,176 | 15,465 | 42,232 | 38,874 | ||||||||||||
Amortization of right-of-use assets - finance leases | 147 | 145 | 440 | 230 | ||||||||||||
General and administrative expenses | 2,601 | 2,977 | 9,382 | 9,329 | ||||||||||||
Acquisition, development and other pursuit costs | 26 | 93 | 555 | 550 | ||||||||||||
Impairment charges | 47 | — | 205 | — | ||||||||||||
Total expenses | 88,489 | 59,179 | 251,448 | 147,110 | ||||||||||||
Gain on real estate dispositions | 3,612 | 4,699 | 6,388 | 4,699 | ||||||||||||
Operating income | 13,376 | 15,378 | 40,063 | 33,214 | ||||||||||||
Interest income | 4,417 | 5,710 | 16,055 | 16,622 | ||||||||||||
Interest expense on indebtedness | (7,294 | ) | (8,828 | ) | (22,252 | ) | (22,205 | ) | ||||||||
Interest expense on finance leases | (229 | ) | (228 | ) | (686 | ) | (340 | ) | ||||||||
Equity in income of unconsolidated real estate entities | — | — | — | 273 | ||||||||||||
Change in fair value of derivatives and other | 318 | (530 | ) | (1,424 | ) | (3,926 | ) | |||||||||
Unrealized credit loss release (provision) | 33 | — | (227 | ) | — | |||||||||||
Other income (expense), net | 177 | 362 | 521 | 426 | ||||||||||||
Income before taxes | 10,798 | 11,864 | 32,050 | 24,064 | ||||||||||||
Income tax benefit | 28 | 199 | 220 | 339 | ||||||||||||
Net income | 10,826 | 12,063 | 32,270 | 24,403 | ||||||||||||
Net loss attributable to noncontrolling interests in investment entities | 45 | (960 | ) | 181 | (640 | ) | ||||||||||
Preferred stock dividends | (2,220 | ) | (1,234 | ) | (4,462 | ) | (1,388 | ) | ||||||||
Net income attributable to common stockholders and OP Unit holders | $ | 8,651 | $ | 9,869 | $ | 27,989 | $ | 22,375 | ||||||||
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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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(Unaudited) | ||||||||||||||||
Net income attributable to common stockholders and OP Unit holders | $ | 8,651 | $ | 9,869 | $ | 27,989 | $ | 22,375 | ||||||||
Depreciation and amortization(1) | 14,131 | 15,057 | 41,867 | 38,331 | ||||||||||||
Gain on operating real estate dispositions(2) | (3,612 | ) | (3,220 | ) | (6,388 | ) | (3,220 | ) | ||||||||
FFO attributable to common stockholders and OP Unit holders | $ | 19,170 | $ | 21,706 | $ | 63,468 | $ | 57,486 | ||||||||
Acquisition, development and other pursuit costs | 26 | 93 | 555 | 550 | ||||||||||||
Impairment of intangible assets and liabilities | 47 | — | 205 | — | ||||||||||||
Unrealized credit loss provision (release) | (33 | ) | — | 227 | — | |||||||||||
Amortization of right-of-use assets - finance leases | 147 | 145 | 440 | 230 | ||||||||||||
Change in fair value of derivatives and other | (318 | ) | 530 | 1,424 | 3,926 | |||||||||||
Normalized FFO available to common stockholders and OP Unit holders | $ | 19,039 | $ | 22,474 | $ | 66,319 | $ | 62,192 | ||||||||
Net income attributable to common stockholders and OP Unit holders per diluted share and unit | $ | 0.11 | $ | 0.13 | $ | 0.36 | $ | 0.31 | ||||||||
FFO attributable to common stockholders and OP Unit holders per diluted share and unit | $ | 0.24 | $ | 0.29 | $ | 0.81 | $ | 0.81 | ||||||||
Normalized FFO attributable to common stockholders and OP Unit holders per diluted share and unit | $ | 0.24 | $ | 0.30 | $ | 0.85 | $ | 0.87 | ||||||||
Weighted average common shares and units - diluted | 78,443 | 74,543 | 78,020 | 71,256 | ||||||||||||
________________________________________
(1) The adjustment for depreciation and amortization for the three months ended September 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 nine months ended September 30, 2020 and 2019 excludes $0.4 million and $0.8 million, respectively, of depreciation attributable to the Company's joint venture partners. The adjustment for depreciation and amortization for the nine months ended September 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. |
(2) The adjustment for gain on operating real estate dispositions for the three and nine months ended September 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. |
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 Core EBITDA 35 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 November 5, 2020, which has been furnished as Exhibit 99.1 to our Form 8-K filed on November 5, 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-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 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 conditions 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. The Company expressly disclaims any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
CORPORATE PROFILE 4 Armada Hoffler Properties, Inc. (NYSE: AHH) is a vertically-integrated, self-managed real estate investment trust ("REIT") with four decades of experience developing, building, acquiring, and managing high-quality, institutional-grade office, retail, and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. In addition to developing and building properties for its own account, the Company also provides development and general contracting construction services to third-party clients. Founded in 1979 by Daniel A. Hoffler, the Company has elected to be taxed as a REIT for U.S. federal income tax purposes. 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 $8.7 million, or $0.11 per diluted share, compared to $9.9 million, or $0.13 per diluted share, for the three months ended September 30, 2019. • Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $19.2 million, or $0.24 per diluted share, compared to $21.7 million, or $0.29 per diluted share, for the three months ended September 30, 2019. See "Non-GAAP Financial Measures." • Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $19.0 million, or $0.24 per diluted share, compared to $22.5 million, or $0.30 per diluted share, for the three months ended September 30, 2019. • Recaptured two prime redevelopment sites - 3 acres in the Town Center of Virginia Beach and nearly 10 acres adjacent to James Madison University in Harrisonburg, Virginia - after terminating leases with Regal Cinemas upon tenant default. Excluding one-time charges of $1.1 million associated with these early terminations, Normalized FFO for the third quarter would have been $0.26 per diluted share. • Updated 2020 full-year Normalized FFO guidance to $1.10 to $1.12 per diluted share from $1.09 to $1.13 per diluted share. • Core operating property portfolio occupancy at 95.4% as of September 30, 2020 compared to 93.6% as of June 30, 2020. The Company's September 30, 2020 occupancy includes office at 96.7%, retail at 94.2%, and multifamily at 95.9%. • Positive releasing spreads on lease renewals during the third quarter of 3.6% on a GAAP basis and 5.1% on a cash basis. • Collected 96% of portfolio rents for the third quarter, including 100% of office tenant rents, 98% of multifamily tenant rents, and 93% of retail tenant rents. Refer to pages 27-28 of the Supplemental Financial Package for further details. • Collected 96% of October portfolio rents, including 100% of office tenant rents, 97% of multifamily tenant rents, and 94% of retail tenant rents. • Announced a new development project, Solis Gainesville, a $52 million 223-unit multifamily project in downtown Gainesville, Georgia. • Ended the third quarter with $122.7 million of third-party construction backlog. • Acquired Nexton Square, a 118,000 square foot open air lifestyle center in Summerville, South Carolina in an off-market transaction. • Acquired partner's 20% ownership interest of the Southern Post project in Roswell, Georgia resulting in 100% ownership of the partnership. • Raised $86.3 million of net proceeds before offering expenses through an underwritten public offering of 3,600,000 shares of 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock at a public offering price of $24.75 per share. • Completed the acquisition of the Edison Apartments in downtown Richmond, Virginia in an off-market, OP Unit transaction. • Completed the off-market acquisition of The Residences at Annapolis Junction, a 416-unit, Class A, LEED Gold certified mid-rise apartment community in Howard County, Maryland.
2020 OUTLOOK & ASSUMPTIONS 6 OUTLOOK LOW HIGH Total NOI $108.2M $109.6M Construction Segment Gross Profit $7.4M $7.8M G&A Expenses $12.7M $13.3M Mezzanine Interest Income $19.8M $20.2M Interest Expense $30.0M $30.5M Normalized FFO per diluted share $1.10 $1.12 GUIDANCE ASSUMPTIONS • Disposition of two unencumbered assets for $8M in cash proceeds at the end of the fourth quarter • Acquisition of Annapolis Junction and Edison Apartments in the fourth quarter • An additional $0.5M of potential 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%
SUMMARY INFORMATION 7 $ IN THOUSANDS, EXCEPT PER SHARE DATE Three months ended 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 OPERATIONAL METRICS Net income attributable to common stockholders and OP unit holders $8,651 $11,178 $8,160 $7,215 $9,869 Net income attributable to common stockholders and OP unit holders per diluted share $0.11 $0.14 $0.11 $0.09 $0.13 Rental properties Net Operating Income (NOI) 24,653 27,373 28,581 27,811 28,167 General contracting and real estate services gross profit 2,108 2,056 1,718 1,058 1,192 Adjusted EBITDA(1) 27,756 29,933 33,103 30,843 31,150 Funds From Operations (FFO) attributable to common stockholders and OP unit holders 19,170 22,046 22,252 22,500 21,706 FFO per diluted share attributable to common stockholders and OP unit holders $0.24 $0.28 $0.29 $0.29 $0.29 Normalized FFO attributable to common stockholders and OP unit holders 19,039 22,583 24,697 22,896 22,474 Normalized FFO per diluted share attributable to common stockholders and OP unit holders $0.24 $0.29 $0.32 $0.30 $0.30 Annualized dividend yield 4.75% NA 8.22% 4.58% 4.64% CAPITALIZATION Common shares outstanding 57,934 57,010 56,492 56,278 54,875 Operating Partnership units outstanding 20,523 21,273 21,273 21,273 21,167 Common shares and OP units outstanding 78,457 78,283 77,765 77,551 76,042 Market price per common share $9.26 $9.95 $10.70 $18.35 $18.09 Common equity capitalization(2) $726,512 $778,916 $832,085 $1,423,061 $1,375,600 Preferred equity capitalization 171,075 63,350 63,250 63,250 63,250 Total equity capitalization $897,587 $842,266 $895,335 $1,486,311 $1,438,850 Total debt(3) 885,359 956,726 1,016,293 960,819 951,891 Total capitalization 1,782,946 1,798,992 1,911,628 2,447,130 2,390,741 Less: cash (79,224) (75,111) (52,788) (43,579) (47,606) Total enterprise value $1,703,722 $1,723,881 $1,858,840 $2,403,551 $2,343,135 BALANCE SHEET METRICS Core debt / enterprise value 37.5% 43.2% 45.0% 33.6% 33.4% Core debt + preferred equity / enterprise value 47.6% 46.8% 48.4% 36.2% 36.1% Fixed charge coverage ratio 2.3x 2.9x 2.8x 2.5x 2.7x Core debt / Annualized core EBITDA 6.3x 6.8x 6.5x 6.8x 6.6x Core debt + preferred equity / Annualized core EBITDA 8.0x 7.3x 7.0x 7.3x 7.2x CORE PORTFOLIO OCCUPANCY Office(4) 96.7% 97.0% 96.6% 96.6% 96.6% Retail(4) 94.2% (6) 95.1% 96.1% 96.9% 96.8% Multifamily(5) 95.9% 87.9% (7) 93.7% 95.6% 95.8% Weighted Average(8) 95.4% 93.6% 95.6% 96.5% 96.5% (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 and student housing occupancy based on occupied units/beds as a % of total. (6) Regal leases which were terminated by the Company subsequent to the quarter are included as occupied in the calculation. (7) Includes impact of seasonality related to student housing. (8) Total occupancy weighted by annualized base rent.
NET ASSET VALUE COMPONENT DATA 8 $ IN THOUSANDS Stabilized Portfolio NOI (Cash)(1) Third-Party General Contracting and Real Estate Services Three months ended 9/30/2020 Trailing 12 Months Office(2) Retail Multifamily Total General Contracting Gross Profit $6,940 Stable Portfolio Portfolio NOI $6,415 $11,586 $6,145 $24,146 Non-Property Assets(3) Unstabilized Properties NOI 202 (229) (392) (419) As of 9/30/2020 Signed Leases Not Yet Occupied or In Free Rent Period 126 981 154 1,261 Cash and Retricted Cash $79,224 Net Deferrals and Recoveries (27) (124) 22 (129) Accounts Receivable 26,465 Stable Portfolio NOI $6,716 $12,214 $5,929 $24,859 Notes Receivable, Including Mezzanine Investments (4) 168,734 Intra-Quarter Transactions Construction receivables, including retentions (4) 43,507 Net Acquisitons - 482 - 482 Acquired lease intangible assets, net 57,958 Net Dispositions - (80) - (80) Other Assets 44,608 Total $0 $402 $0 $402 Total Non-Property Assets $420,496 Annualized $26,864 $50,464 $23,716 $101,044 Liabilities(3) As of 9/30/2020 Non-Stabilized Portfolio Mortgages and Notes Payable(4) $885,359 As of 9/30/2020 Accounts Payable and Accrued Liabilities 20,667 Development Cost - See Page 18 $210,000 Construction Payables, Including Retentions 55,825 Cosmopolitan Redevelopment Cost - See Page 18 13,000 Other Liabilities 64,270 Total Non-Stabilized Portfolio $223,000 Total Liabilities $1,026,121 Management's Estimate of Land Value and Vacancy Opportunities Preferred Equity Size Estimated Land Value Liquidation Value Columbus Village II Redevelopment Opportunity Series A Cumulative Redeemable Perpetual Preferred Stock $171,075 Multifamily 250 units $30,000-40,000/unit Retail 30,000 sf $20-25/sf Common Equity Harrisonburg Regal Redevelopment Opportunity As of 9/30/2020 Multifamily 190 units $25,000-35,000/unit Total common shares outstanding 57,934 Retail 50,000 sf $12-18/sf Total OP units outstanding 20,523 Total Common Shares & OP Units Outstanding 78,457 Size Rent PSF Other Vacant Retail with Active Prospects 90,000 sf $22-26/sf (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) Excludes lease right of use assets and lease liabilities. (4) Excludes GAAP adjustments.
SUMMARY BALANCE SHEET 9 $ IN THOUSANDS As of 9/30/2020 12/31/2019 Assets (Unaudited) Real estate investments: Income producing property $1,531,910 $1,460,723 Held for development 13,607 5,000 Construction in progress 60,810 140,601 Accumulated depreciation (241,859) (224,738) Net real estate investments 1,364,468 1,381,586 Real estate investments held for sale - 1,460 Cash and cash equivalents 73,579 39,232 Restricted cash 5,645 4,347 Accounts receivable, net 26,465 23,470 Notes receivable, net 168,716 159,371 Construction receivables, including retentions, net 43,324 36,361 Construction contract costs and estimated earnings in excess of billings, net 215 249 Operating lease right-of-use assets, net 32,818 33,088 Finance lease right-of-use assets, net 23,691 24,130 Acquired lease intangible assets, net 57,958 68,702 Other assets 44,393 32,901 Total Assets $1,841,272 $1,804,897 Liabilities and Equity Indebtedness, net $886,509 $950,537 Accounts payable and accrued liabilities 20,667 17,803 Construction payables, including retentions 55,825 53,382 Billings in excess of costs and estimated earnings 7,085 5,306 Operating lease liabilities 41,589 41,474 Finance lease liabilities 17,941 17,903 Other liabilities 60,219 63,045 Total Liabilities 1,089,835 1,149,450 Total Equity 751,437 655,447 Total Liabilities and Equity $1,841,272 $1,804,897
SUMMARY INCOME STATEMENT 10 IN THOUSANDS, EXCEPT PER SHARE DATA Three months ended Nine months ended 9/30/2020 9/30/2019 9/30/2020 9/30/2019 Revenues (Unaudited) Rental revenues $39,636 $42,220 $121,840 $109,507 General contracting and real estate services revenues 58,617 27,638 163,283 66,118 Total Revenues 98,253 69,858 285,123 175,625 Expenses Rental expenses 10,223 9,873 27,907 24,513 Real estate taxes 4,760 4,180 13,326 10,759 General contracting and real estate services expenses 56,509 26,446 157,401 62,855 Depreciation and amortization 14,176 15,465 42,232 38,874 Amortization of right-of-use assets - finance leases 147 145 440 230 General and administrative expenses 2,601 2,977 9,382 9,329 Acquisition, development and other pursuit costs 26 93 555 550 Impairment charges 47 - 205 - Total Expenses 88,489 59,179 251,448 147,110 Gain on real estate dispositions 3,612 4,699 6,388 4,699 Operating Income 13,376 15,378 40,063 33,214 Interest income 4,417 5,710 16,055 16,622 Interest expense on indebtedness (7,294) (8,828) (22,252) (22,205) Interest expense on finance leases (229) (228) (686) (340) Change in fair value of derivatives and other 318 (530) (1,424) (3,926) Equity in income of unconsolidated real estate entities - - - 273 Unrealized credit loss release (provision) 33 - (227) - Other income (expense), net 177 362 521 426 Income before taxes 10,798 11,864 32,050 24,064 Income tax benefit 28 199 220 339 Net Income $10,826 $12,063 $32,270 $24,403 Net income attributable to noncontrolling interest in investment entities 45 (960) 181 (640) Preferred stock dividends (2,220) (1,234) (4,462) (1,388) Net income attributable to AHH and OP Unit holders $8,651 $9,869 $27,989 $22,375 Net income per diluted share and unit attributable to AHH and OP Unit holders $0.11 $0.13 $0.36 $0.31 Weighted Average Shares & Units - Diluted 78,443 74,543 78,020 71,256
(1) FFO, NORMALIZED FFO & AFFO 11 IN THOUSANDS, EXCEPT PER SHARE DATA Three months ended (Unaudited) 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 Funds From Operations Net income attributable to AHH and OP unit holders $8,651 $11,178 $8,160 $7,215 $9,869 Earnings per diluted share $0.11 $0.14 $0.11 $0.09 $0.13 Depreciation and amortization(2) 14,131 13,644 14,092 15,285 15,057 Gains on dispositions of operating real estate(3) (3,612) (2,776) - - (3,220) FFO $19,170 $22,046 $22,252 $22,500 $21,706 FFO per diluted share $0.24 $0.28 $0.29 $0.29 $0.29 Normalized FFO Acquisition, development & other pursuit costs 26 502 27 294 93 Loss on extinguishment of debt - - - 30 - Non cash GAAP Adjustments 161 29 682 399 145 Change in fair value of interest rate derivatives (318) 6 1,736 (327) 530 Normalized FFO 19,039 22,583 24,697 22,896 22,474 Normalized FFO per diluted share $0.24 $0.29 $0.32 $0.30 $0.30 Adjusted FFO Non-cash stock compensation 456 421 1,030 274 323 Acquisition, development & other pursuit costs (26) (502) (27) (294) (93) Tenant improvements, leasing commissions, lease incentives (4) (2,770) (728) (1,318) (1,065) (2,057) Property related capital expenditures (1,373) (2,316) (1,014) (2,426) (1,565) Adjustment for loan modification and exit fees (614) (614) (2,074) (1,860) (1,371) Non-cash interest expense(5) 874 673 638 588 425 Cash ground rent payment - finance lease (291) (241) (216) (216) (207) GAAP Adjustments (684) (6,295) (984) (958) (1,686) AFFO $14,611 $12,981 $20,732 $16,939 $16,243 AFFO per diluted share $0.19 $0.17 $0.27 $0.22 $0.22 Weighted Average Common Shares Outstanding 57,923 56,668 56,398 55,581 53,463 Weighted Average OP Units Outstanding 20,520 21,273 21,273 21,181 21,080 Total Weighted Average Common Shares and OP Units Outstanding 78,443 77,941 77,671 76,762 74,543 (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 9/30/2020 Maturity Date 2020 2021 2022 2023 2024 Thereafter 9/30/2020 Secured Notes Payable - Core Debt Hoffler Place L+3.24% 3.39% Jan-2021 - $31,197 $31,197 Southgate Square L+1.60% 1.75% Apr-2021 220 19,682 19,902 Nexton Square L+2.25% 2.40% Aug-2021 - 22,909 22,909 Encore Apartments 3.25% 3.25% Sep-2021 127 24,337 24,464 4525 Main Street 3.25% 3.25% Sep-2021 164 31,231 31,395 Red Mill West 4.23% 4.23% Jun-2022 113 465 10,386 10,964 Thames Street Wharf L+1.30% 1.81% (1) Jun-2022 - - 70,000 70,000 Marketplace at Hilltop 4.42% 4.42% Oct-2022 101 414 9,706 10,221 1405 Point L+2.25% 2.40% Jan-2023 - 714 754 51,532 53,000 Socastee Commons 4.57% 4.57% Jan-2023 28 115 120 4,223 4,486 Sandbridge Commons (2) L+1.75% 1.90% Jan-2023 62 257 268 7,248 7,835 249 Central Park Retail L+1.60% 3.85% (1) Aug-2023 59 245 260 16,092 16,656 Fountain Plaza Retail L+1.60% 3.85% (1) Aug-2023 36 147 156 9,685 10,024 South Retail L+1.60% 3.85% (1) Aug-2023 26 107 114 7,066 7,313 One City Center L+1.85% 2.00% Apr-2024 152 628 659 691 22,734 24,864 Red Mill Central 4.80% 4.80% Jun-2024 44 175 175 175 1,837 2,406 Premier Apartments L+1.55% 1.70% Oct-2024 34 208 221 234 16,053 16,750 Red Mill South 3.57% 3.57% May-2025 77 315 327 338 351 4,502 5,910 Brooks Crossing Office L+1.60% 1.75% Jul-2025 206 831 846 861 876 11,897 15,517 Market at Mill Creek L+1.55% 1.70% Jul-2025 162 647 647 647 647 11,201 13,951 Johns Hopkins Village L+1.25% 4.19% (1) Aug-2025 242 988 1,031 1,075 1,116 46,649 51,101 North Point Center Note 2 7.25% 7.25% Sep-2025 34 140 151 162 174 1,467 2,128 Lexington Square 4.50% 4.50% Sep-2028 65 268 280 293 306 13,293 14,505 Red Mill North 4.73% 4.73% Dec-2028 26 105 110 116 121 3,841 4,319 Greenside Apartments 3.17% 3.17% Dec-2029 176 712 735 759 783 30,321 33,486 Smith's Landing 4.05% 4.05% Jun-2035 215 880 917 956 994 13,584 17,546 Liberty Apartments 5.66% 5.66% Nov-2043 73 304 322 341 361 12,549 13,950 The Cosmopolitan 3.35% 3.35% Jul-2051 201 819 847 876 906 39,461 43,110 Total - Secured Core Debt 2,643 138,840 99,032 103,370 47,259 188,765 579,909 Secured Notes Payable - Development Pipeline Summit Place L+3.24% 3.39% Jan-2021 - 34,615 34,615 Wills Wharf L+2.25% 2.40% Jun-2023 - - - 57,585 57,585 Premier Retail L+1.55% 1.70% Oct-2024 17 102 109 115 7,907 8,250 Solis Gainesville L+3.00% 3.75% Aug-2024 Total - Development Pipeline 17 34,717 109 57,700 7,907 - 100,450 Total Secured Notes Payable $2,660 $173,557 $99,141 $161,070 $55,166 $188,765 $680,359 Unsecured Core Debt Senior Unsecured Line of Credit L+1.30%-1.85% 1.75% Jan-2024 - - - - - - - Senior Unsecured Term Loan L+1.25%-1.80% 1.70% 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 - - - - - 205,000 205,000 Total Notes Payable excluding GAAP Adjustments $2,660 $173,557 $99,141 $161,070 $55,166 $393,765 $885,359 GAAP Adjustments 1,150 Total Notes Payable $886,509 (1) Includes debt subject to interest rate swap locks. (2) Loan was extinguished on October 6, 2020.
DEBT INFORMATION 13 $ IN THOUSANDS Debt Maturities $350,000 5.0% $300,000 4.0% $250,000 3.4% 3.0% 3.0% $200,000 2.8% 2.5% $150,000 2.1% 2.0% $100,000 1.0% $50,000 $0 0.0% 2020 2021 2022 2023 2024 Thereafter⁽¹⁾ Debt Maturing 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 December 2018 January 2021 2.75% $50,000 May 2019 June 2022 2.50% 100,000 Unsecured Debt 23.2% 3.1% 4.3 Yrs January 2020 February 2022 1.75% 100,000 Secured Debt 76.8% 3.0% 5.4 Yrs March 2020 March 2022 1.50% 100,000 Variable vs. Fixed-rate Debt July 2020 July 2023 0.50% 100,000 (1) Variable-rate Debt 36.8% 2.4% 2.3 Yrs Total Interest Rate Caps $450,000 Fixed-rate Debt(2)(3) 63.2% 3.4% 6.8 Yrs (2)(3) Fixed-rate and Hedged Debt(2)(3) 100% Fixed-rate Debt $559,484 Total 3.0% 5.1 Yrs Fixed-rate and Hedged Debt $1,009,484 Total Debt(3) $885,359 (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.
CORE DEBT TO CORE EBITDA 14 $ IN THOUSANDS SEE PAGE 34 FOR CALCULATION AND RECONCILIATION. Three months ended 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 Net income attributable to common stockholders and OP unit holders $8,651 $11,178 $8,160 $7,215 $9,869 Adjusted EBITDA(1)(2)(4) $27,756 $29,933 $33,103 $30,843 $31,150 Other adjustments: Development/Redevelopment (2,225) (1,085) (1,133) (1,010) (1,499) (Less) Acquisitions/Dispositions completed intra-quarter (155) (1,351) - - (226) Core EBITDA(4) $25,376 $27,497 $31,970 $29,833 $29,425 Annualized Core EBITDA $101,502 $109,989 $127,880 $119,332 $117,700 Total debt(3) $885,359 $956,726 $1,016,293 $960,819 $951,891 Adjustments to debt: (Less) Development/Redevelopment (143,560) (137,508) (127,650) (109,930) (122,597) (Less) Net Acquisitions completed intra-quarter (22,909) - - - - (Less) Cash & restricted cash (79,224) (75,111) (52,788) (43,579) (47,606) Core Debt(4) $639,666 $744,107 $835,855 $807,310 $781,688 Core Debt/Annualized Core EBITDA 6.3x 6.8x 6.5x 6.8x 6.6x (1) See reconciliation on page 34. (2) Excludes non-recurring items. (3) Excludes GAAP Adjustments. (4) See Page 31 for definition
CAPITALIZATION & FINANCIAL RATIOS 15 $ IN THOUSANDS AS OF SEPTEMBER 30, 2020 Debt % of Total Principal Balance Unsecured credit facility 0% $0 Debt Unsecured term loans 23% 205,000 50% Mortgages payable 77% 680,359 Equity 10% 12% Total debt $885,359 50% Liquidation Value Preferred Equity Shares Per Share Total Liquidation Value 6.75% Series A Cumulative Redeemable 6,843 $25.00 $171,075 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) 74% 57,934 $9.26 $536,469 Common units 26% 20,523 $9.26 190,043 Common Units Mortgages Payable 38% Equity market capitalization 78,457 $726,512 Total capitalization $1,782,946 30% Financial Ratios Debt Service Coverage Ratio(1) 2.8x Fixed Charge Coverage Ratio(2) 2.3x 10% Net Debt to Adjusted EBITDA 8.0x Core Debt to Core EBITDA 6.3x Core Debt + Preferred Equity to Core EBITDA 8.0x Debt/Market Capitalization 50% Liquidity Unencumbered Properties Cash on hand $79,224 % of Total Properties 56% Availability under credit facility 125,000 % of Annualized Base Rent 38% Availability under construction loans 52,785 $257,009 (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 SEPTEMBER 30, 2020 Net Rentable Square Feet (RSF)(1) Development/ Development/ Town Unencumbered Redevelopment Core Redevelopment ABR per Retail Properties Anchor Tenant(s) Location Center ABR Year Built Core Properties Properties Total Occupancy(2) Leased(2) ABR(3) Leased SF(3) 249 Central Park Retail Cheesecake Factory, Brooks Brothers Virginia Beach, VA ✓ - 2004 92,400 - 92,400 89.3% - $2,135,402 $25.87 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% - 2,109,141 17.95 Broadmoor Plaza Kroger South Bend, IN 100% 1980 115,059 - 115,059 97.5% - 1,387,073 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(12), BB&B Virginia Beach, VA ✓ 100% 1995/1996 92,061 - 92,061 96.7% - 1,595,334 17.92 Commerce Street Retail 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 75.3% - 1,465,285 18.34 Fountain Plaza Retail Ruth's Chris, Ann Taylor Virginia Beach, VA ✓ - 2004 35,961 - 35,961 100.0% - 998,614 27.77 Greentree Shopping Center Various Small Shops Chesapeake, VA 100% 2014 15,719 - 15,719 92.6% - 328,536 22.57 Hanbury Village(6) Harris Teeter Chesapeake, VA 100% 2006/2009 101,815 - 101,815 100.0% - 2,107,217 20.70 Harrisonburg Regal Regal Cinemas(12) 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% - 1,808,848 21.53 Market at Mill Creek (6) Lowes Foods Mt. Pleasant, SC - 2018 80,319 - 80,319 97.7% - 1,810,527 23.06 Marketplace at Hilltop(6)(9) Total Wine, Panera, Chic-Fil-A Virginia Beach, VA - 2000/2001 116,953 - 116,953 98.6% - 2,621,586 22.73 Nexton Square Various Small Shops Summerville, SC - 2020 127,216 - 127,216 89.7% - 2,960,280 25.93 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 99.1% - 3,750,884 7.65 Oakland Marketplace(6) Kroger Oakland, TN 100% 2004 64,538 - 64,538 100.0% - 483,768 7.50 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% - 733,362 20.54 Patterson Place BB&B, PetSmart, DSW Durham, NC 100% 2004 160,942 - 160,942 81.1% - 2,153,162 16.50 Perry Hall Marketplace Safeway Perry Hall, MD 100% 2001 74,256 - 74,256 100.0% - 1,280,535 17.24 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 94.7% - 2,690,403 27.56 Red Mill Commons(6) Homegoods, Walgreens Virginia Beach, VA 8% 2000-2005 373,808 - 373,808 89.3% - 6,112,108 18.31 Sandbridge Commons(6) Harris Teeter Virginia Beach, VA 100% (11) 2015 76,650 - 76,650 98.5% - 1,072,632 14.21 Socastee Commons Bi-Lo(12) Myrtle Beach, SC - 2000/2014 57,273 - 57,273 100.0% - 653,270 11.41 Southgate Square Burlington, PetSmart, Michaels, Conn's Colonial Heights, VA - 1991/2016 260,131 - 260,131 93.0% - 3,362,909 13.89 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 83.1% - 697,588 20.83 Studio 56 Retail Rocket Mortgage Virginia Beach, VA ✓ 100% 2007 11,594 - 11,594 15.2% - 52,860 30.00 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(12), T.J. Maxx, Petco Greensboro, NC 100% 2004 176,939 - 176,939 99.4% - 3,512,858 19.97 Total / Weighted Avg Retail Portfolio 59% 3,547,879 142,497 3,690,376 94.2% $59,502,334 $17.13 Square Footage Properties with Tenants Subject to Number of Leased Pursuant to Ground Lease Ground Leases Ground Leases ABR Broad Creek Shopping Center 6 23,825 $649,818 Columbus Village 1 3,403 200,000 Hanbury Village 2 55,586 1,082,118 Market at Mill Creek 1 7,014 63,000 Marketplace at Hilltop 1 4,211 149,996 North Point Center 4 280,556 1,146,700 Oakland Marketplace 1 45,000 186,347 Red Mill Commons 8 33,961 773,639 Sandbridge Commons 3 60,521 738,500 Tyre Neck Harris Teeter 1 48,859 533,285 Total / Weighted Avg 28 562,936 $5,523,403
PROPERTY PORTFOLIO CONT. 17 AS OF SEPTEMBER 30, 2020 Net Rentable Square Feet (RSF)(1) Town Core Development Development Office Properties Anchor Tenant(s) Location Center Unencumbered ABR Year Built Properties Properties Total Core 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% - $6,952,774 $29.78 Armada Hoffler Tower(4)(5) AHH, Troutman Sanders, Williams Mullen Virginia Beach, VA ✓ 100% 2002 320,680 - 320,680 95.1% - 8,899,458 29.18 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 128,770 - 128,770 97.6% - 3,193,112 25.41 One City Center Duke University, WeWork Durham, NC - 2019 151,599 - 151,599 89.3% - 4,187,530 30.92 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 95.4% - 2,557,899 24.72 Wills Wharf(9) Canopy by Hilton, EY Baltimore, MD - 2020 - 327,133 327,133 - 47.2% 2,726,155 17.66 Total / Weighted Average Office Portfolio 39% 1,305,933 327,133 1,633,066 96.7% $37,604,818 $26.53 Units/Beds Development/ Development/ Town Core Redevelopment Redevelopment Monthly Effective Rent Multifamily Properties Location Center Unencumbered AQR Year Built Properties Properties Total Units Core Occupancy (2) Occupancy(2) AQR (7) per Occupied Unit 1405 Point(8)(9) Baltimore, MD - 2018 289 - 289 92.7% - $7,090,006 $2,205 Encore Apartments Virginia Beach, VA ✓ - 2014 286 - 286 98.3% - 4,793,803 $1,422 Greenside Apartments Charlotte, NC - 2018 225 - 225 96.0% - 4,236,690 $1,635 Liberty Apartments(8) Newport News, VA - 2013 197 - 197 93.9% - 2,866,396 $1,111 Premier Apartments Virginia Beach, VA ✓ - 2018 131 - 131 97.7% - 2,517,674 $1,639 Smith's Landing(9) Blacksburg, VA - 2009 284 - 284 100.0% - 4,826,763 $1,416 The Cosmopolitan(8) Virginia Beach, VA ✓ - 2006 - 342 342 - 95.0% 6,610,640 $1,695 Multifamily Total - 1,412 342 1,754 98.6% $32,941,972 $1,599 Hoffler Place(8)(10) Charleston, SC - 2019 258 - 258 98.4% - $3,289,136 $1,079 Johns Hopkins Village(8)(9)(10) Baltimore, MD - 2016 568 - 568 88.2% - 7,974,089 $1,326 Summit Place(10) Charleston, SC - 2020 - 357 357 - 98.0% 3,605,451 $858 Student Housing Total - 826 357 1,183 91.4% $14,868,677 $1,121 Total / Weighted Avg Multifamily Portfolio - 2,238 699 2,937 95.9% $47,810,649 $1,412 (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 past leases. The net rentable square footage included in office leases is generally consistent with the Building Owners and Managers Association, or BOMA, 1996 measurement guidelines. (2) Occupancy for each of our retail & office properties is calculated as (a) square footage under executed leases as of September 30, 2020, divided by (b) net rentable square feet, expressed as a percentage. Occupancy for our multifamily properties is calculated as (a) total units occupied as of September 30, 2020, divided by (b) total units available, as of such date expressed as a percentage. (3) For the properties in our retail & office portfolios, annualized base rent, or ABR, is calculated by multiplying (a) monthly base rent (defined as cash base rent, before contractual tenant concessions and abatements, and excluding tenant reimbursements for expenses paid by us) as of September 30, 2020 for in-place leases as of such date by (b) 12, and does not give effect to periodic contractual rent increases or contingent rental revenue (e.g., percentage rent based on tenant sales thresholds). ABR per leased square foot is calculated by dividing (a) ABR by (b) square footage under in-place leases as of September 30, 2020. In the case of triple net or modified gross leases, our calculation of ABR does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses. (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 consolidated financial statements. (5) Includes ABR pursuant to a rooftop lease. (6) Net rentable square feet at certain of our retail properties includes pad sites leased pursuant to the ground leases in the table on page 16. (7) For the properties in our multifamily portfolio, AQR is calculated by multiplying (a) revenue for the quarter ended September 30, 2020 by (b) 4. (8) The AQR for Liberty, Cosmopolitan, Johns Hopkins Village, Hoffler Place, and 1405 Point excludes approximately $0.3M, $0.7M, $1.1M, $0.1M and $0.4M, respectively, from ground floor retail leases. (9) The Company leases all or a portion of the land underlying this property pursuant to a ground lease. (10) Student Housing property that is leased by bed. Monthly effective rent per occupied unit is calculated by dividing total base rental payments for the month ended September 30, 2020 by the number of occupied beds. (11) Property was unencumbered as of October 6, 2020. (12) The Company has knowledge of an upcoming termination for this tenant. See table on page 28 for additional details.
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 Solis Gainesville Multifamily 223 units - 3Q20 2Q22 3Q23 $52,000 $31,000 $8,000 95% NA Gainesville, GA Total Projects Under Development $52,000 $31,000 $8,000 Delivered Not Stabilized Premier Retail (Town Center Phase VI) Retail 39,000 sf 76% 4Q16 3Q18 4Q21 $18,000 $8,000 $16,000 100% Williams-Sonoma, Pottery Barn Virginia Beach, VA Summit Place (Meeting Street) Multifamily 357 beds 98% 3Q17 3Q20 4Q20 56,000 35,000 56,000 90% NA Charleston, SC Wills Wharf Office 325,000 sf 53% 3Q18 2Q20 2Q22 120,000 76,000 106,000 100% Canopy by Hilton, EY Baltimore, MD Total Projects Delivered Not Stabilized $194,000 $119,000 $178,000 Predevelopment or On Hold Chronicle Mill 238 units / (3) Multifamily - TBD TBD TBD TBD TBD $5,000 85% NA Belmont, NC 10,000 sf Southern Post 138 units / (4) Mixed-use - TBD TBD TBD TBD TBD 10,000 100% 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 $24,000 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 Renovated 292 units including upgraded finishes, new The Cosmopolitan cabinetry and flooring, energy efficient appliances, and LED Multifamily 96% 0 units 1Q18 4Q20 4Q20 $13,000 $13,000 9% Virginia Beach, VA lighting; modernize resident clubhouse and business center. Remainder of units to be renovated at a later date. 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 6,300 7% into a destination entertainment concept for a new to market Virginia Beach, VA tenant, Apex Entertainment. Total Projects Under Redevelopment $21,000 $19,300 8% Q3 2020 YTD Capitalized Interest $534 $3,222 Capitalized Overhead $409 $2,051 (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) Acquired remaining 20% ownership subsequent to quarter end.
MEZZANINE INVESTMENTS 19 $ IN THOUSANDS Schedule(1) Principal Property % Leased Initial Mezzanine Mezzanine Outstanding Investments Type Estimated(1) or LOI Occupancy Loan Maturity Interest Rate Financing Interest QTD Solis Apartments at Interlock Multifamily 349 units NA 4Q20 3Q22 13% $23,000 $847 Atlanta, GA The Interlock Mixed-use 300,000 sf 77% 4Q20 3Q22 15% 67,000 2,575 Atlanta, GA Nexton Square-loan paid off during quarter 380 Total $90,000 $3,802 Mezzanine Interest Expense (659) Net Mezzanine Interest Income $3,143 9/30/20 Principal Property % Leased Financing AHH Investment to Acquisitions Type Estimated(1) or LOI Outstanding Acquisition Status Nexton Square-Phase I Mixed-use 118,000 sf 94% $ - Exercised Discounted Purchase Option 9/22/20 Summerville, SC Delray Plaza (Whole Foods)(2) Retail 83,000 sf 100% 12,000 Signed LOI to acquire property Delray Beach, FL The Residences at Annapolis Junction(2) Multifamily 416 units 96% 36,000 Acquired 10/30/20 Annapolis Junction, MD The Interlock 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 Edison Apartments Richmond, VA 174 units $25,700 $ - $7,600 6.8% 4Q20 NA 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/ $678,013 $ 130,124 $ 149,750 7.2% 174 units DISPOSITIONS Square Cash Cap Properties Location Feet/Units Sale Price Cash Proceeds Gain on Sale Rate Disposition Date Anchor Tenants Hanbury Walgreens Chesapeake, VA 14,820 $7,300 $7,000 $3,558 6.1% 3Q20 Walgreens 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 1,544,882 sf/ $337,050 $263,400 $69,446 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 9/30/2020 Backlog of Completion The Interlock Atlanta, GA $95,560 $81,507 $14,053 4Q 2020 27th Street Garage and Apartments Virginia Beach, VA 80,749 41,190 39,559 3Q 2021 Solis Apartments at Interlock Atlanta, GA 64,715 50,295 14,420 1Q 2021 Boulders Lakeside Apartments Chesterfield, VA 35,717 33,529 2,188 4Q 2020 Holly Springs Apartments Holly Springs, NC 34,755 6,632 28,123 3Q 2021 Sub Total 311,496 213,153 98,343 All Other Projects 293,017 268,669 24,348 Total $604,513 $481,822 $122,691 Gross Profit Summary Trailing 12 Q3 2020 Months (Unaudited) Revenue $58,617 $203,024 Expense (56,509) (196,084) Gross Profit $2,108 $6,940 The Interlock Atlanta, GA
SAME STORE NOI BY SEGMENT 22 $ IN THOUSANDS (RECONCILIATION TO GAAP LOCATED IN APPENDIX ON PG. 35) Three months ended Nine months ended 9/30/2020 9/30/2019 $ Change % Change 9/30/2020 9/30/2019 $ Change % Change Office(1) (Unaudited) (Unaudited) Revenue $10,232 $10,283 ($51) -0.5% $15,812 $16,148 ($336) -2.1% Rental Expenses(2) 2,361 2,598 (237) -9.1% 4,146 4,210 (64) -1.5% Real Estate Taxes 1,287 1,141 146 12.8% 1,664 1,588 76 4.8% Net Operating Income $6,584 $6,544 $40 0.6% $10,002 $10,350 ($348) -3.4% Retail(1) Revenue $14,530 $16,686 ($2,156) -12.9% $36,656 $39,019 ($2,363) -6.1% Rental Expenses(2) 2,206 2,273 (67) -2.9% 4,977 5,337 (360) -6.7% Real Estate Taxes 1,724 1,784 (60) -3.4% 4,254 4,113 141 3.4% Net Operating Income $10,600 $12,629 ($2,029) -16.1% $27,425 $29,569 ($2,144) -7.3% Multifamily(1) Revenue $9,152 $8,836 $316 3.6% $16,157 $16,299 ($142) -0.9% Rental Expenses(2) 3,108 3,053 55 1.8% 5,198 5,245 (47) -0.9% Real Estate Taxes 967 574 393 68.5% 1,468 1,167 301 25.8% Net Operating Income $5,077 $5,209 ($132) -2.5% $9,491 $9,887 ($396) -4.0% Same Store Net Operating Income (NOI) $22,261 $24,382 ($2,121) -8.7% $46,918 $49,806 ($2,888) -5.8% GAAP Adjustments (261) (1,221) 960 (2,159) (1,492) (667) Same store portfolio NOI, cash basis excluding nine months ended $2.2M of deferred rent $22,000 $23,161 ($1,161) -5.0% $44,759 $48,314 ($3,555) -7.4% NOI, Cash Basis Office $6,298 $5,896 $402 6.8% $9,922 $9,486 $436 4.6% Retail 10,906 12,231 (1,325) -10.8% 25,536 29,222 (3,686) -12.6% Multifamily 4,796 5,034 (238) -4.7% 9,301 9,606 (305) -3.2% $22,000 $23,161 ($1,161) -5.0% $44,759 $48,314 ($3,555) -7.4% NOI: Office $6,584 $6,544 $40 0.6% $10,002 $10,350 ($348) -3.4% Retail 10,600 12,629 (2,029) -16.1% 27,425 29,569 (2,144) -7.3% Multifamily 5,077 5,209 (132) -2.5% 9,491 9,887 (396) -4.0% $22,261 $24,382 ($2,121) -8.7% $46,918 $49,806 ($2,888) -5.8% (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 $0.5M and $0.5M for the 3 months ended 9/30/2020 & 9/30/2019, respectively, and $1.0M and $1.2M for the months ended 9/30/20 & 9/30/19, respectively.
(1) TOP 10 TENANTS BY ABR 23 $ IN THOUSANDS AS OF SEPTEMBER 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 15.6% 4.1% Clark Nexsen 1 2029 2,692 7.2% 1.9% WeWork 1 2034 2,010 5.3% 1.4% Duke University 1 2029 1,579 4.2% 1.1% Huntington Ingalls 1 2029 1,544 4.1% 1.1% Mythics 1 2030 1,211 3.2% 0.8% Johns Hopkins Medicine 1 2023 1,149 3.1% 0.8% Pender & Coward 1 2030 926 2.5% 0.6% Kimley-Horn 1 2027 912 2.4% 0.6% Troutman Sanders 1 2025 889 2.4% 0.6% Top 10 Total $ 18,791 50.0% 13.0% Retail Portfolio(2) 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 5.8% 2.4% Lowes Foods 2 2037 ; 2039 1,976 3.3% 1.4% PetSmart 5 2022 - 2025 1,461 2.5% 1.0% Apex Entertainment 1 2035 1,050 1.8% 0.7% Bed, Bath, & Beyond 2 2022 ; 2025 1,047 1.8% 0.7% Petco 4 2022 - 2030 892 1.5% 0.6% Total Wine & More 2 2024 ; 2027 765 1.3% 0.5% Ross Dress for Less 2 2025 ; 2027 762 1.3% 0.5% TJ Maxx/HomeGoods 3 2022 - 2025 748 1.3% 0.5% Safeway 1 2026 718 1.2% 0.5% Top 10 Total $ 12,895 21.8% 8.8% (1) Includes leases from the development and redevelopment properties that have been delivered, but not stabilized. (2) Tenants with known terminations (see table on page 28) have been removed.
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 Q3 2020 - - 1 13,316 $0.00 $0.00 0.0% $0.00 $0.00 0.0% - - - 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 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 Q3 2020 2 8,984 $24.98 6.59 $525,540 $58.50 Q2 2020 - - - - - - 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 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 Q3 2020 16 138,355 7 32,336 16.92 16.33 3.6% $17.40 $16.55 5.1% 4.92 $98,170 $0.71 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 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 Q3 2020 4 8,425 $18.73 5.03 $87,499 $10.39 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 (1) Excludes leases from properties in development.
OFFICE LEASE EXPIRATIONS 25 AS OF SEPTEMBER 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 - 43,057 3.3% $ - - $ - M-T-M 2 - - 2,400 - - 2020 4 3,657 0.3% 109,249 0.3% 29.87 2021 13 49,309 3.8% 1,379,195 4.0% 27.97 2022 9 47,077 3.6% 1,279,570 3.7% 27.18 2023 12 103,647 7.9% 2,764,437 7.9% 26.67 2024 10 134,075 10.3% 3,287,068 9.4% 24.52 2025 18 142,117 10.9% 4,206,527 12.1% 29.60 2026 9 45,214 3.5% 1,132,901 3.2% 25.06 2027 5 254,819 19.5% 7,355,848 21.1% 28.87 2028 7 69,036 5.3% 2,001,502 5.7% 28.99 2029 7 242,709 18.6% 6,265,518 18.0% 25.81 2030 6 107,801 8.3% 3,046,801 8.7% 28.26 Thereafter 2 63,415 4.7% 2,047,646 5.9% 32.29 Total / Weighted Average 104 1,305,933 100.0% $ 34,878,662 100.0% $ 27.62 300,000 25.0% Square Feet % of Portfolio 250,000 20.0% Under Lease ABR 200,000 2,500 or less 3% 15.0% 2,501-10,000 14% 150,000 10.0% 10,001-20,000 16% 100,000 20,001-40,000 21% 50,000 5.0% 40,001-100,000 30% - 0.0% Greater than 100,000 16% Office Portfolio Total 100% Leased Square Feet % ABR of Office Portfolio (1) Excludes leases from properties in development and delivered, not yet stabilized.
RETAIL LEASE EXPIRATIONS 26 AS OF SEPTEMBER 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 - 206,920 5.7% $ - - $ - M-T-M 1 1,400 - 25,550 - 18.25 2020 15 204,290 5.6% 3,039,455 5.2% 14.88 2021 65 287,458 7.9% 5,032,353 8.6% 17.51 2022 75 334,540 9.2% 5,488,115 9.4% 16.40 2023 65 432,320 11.8% 6,942,875 11.9% 16.06 2024 74 317,985 8.7% 6,106,181 10.4% 19.20 2025 85 586,283 16.1% 8,220,447 14.0% 14.02 2026 39 270,117 7.4% 5,212,918 8.9% 19.30 2027 24 153,482 4.2% 3,241,593 5.5% 21.12 2028 22 98,282 2.7% 1,561,712 2.7% 15.89 2029 25 108,074 3.0% 2,285,233 3.9% 21.15 2030 24 135,702 3.7% 3,096,964 5.3% 22.82 Thereafter 23 514,361 14.0% 8,279,921 14.2% 16.10 Total / Weighted Average 537 3,651,214 100.0% $ 58,533,317 100.0% $ 16.99 700,000 16.0% Square Feet 600,000 14.0% Under Lease % of Portfolio ABR 12.0% 500,000 2,500 or less 15% 10.0% 400,000 2,501-10,000 33% 8.0% 300,000 10,001-20,000 14% 6.0% 20,001-40,000 15% 200,000 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) Excludes leases from properties in development and delivered, not yet stabilized.
COVID-19 OVERALL COLLECTIONS (2) 27 AS OF OCTOBER 27, 2020 $ in Thousands COLLECTIONS BY SECTOR OFFICE MULTIFAMILY RETAIL TOTAL Period $ % $ % $ % $ % 2Q20(3) $ 9,811 100% $10,527 99% $12,030 72% $32,368 87% 3Q20 $ 9,895 100% $12,187 98% $15,259 93% $37,341 96% October(1) $ 3,349 100% $ 4,215 97% $ 5,190 94% $12,754 96% 3Q20 3Q20 TOP 20 COLLECTIONS (4) COLLECTIONS (1)(4) Collected 96% 2% 99% 2% Outstanding 1% (1) Excludes 2 Regal leases which were terminated subsequent to 9/30/20. (2) Data reported relates to rent charges and collections through 10/27/20 and does not correspond to the reporting segment classification of the properties as a whole. (3) Data from second quarter supplemental package. (4) As a percentage of 3Q20 rent and recovery charges due.
COVID-19 EFFECT 28 AS OF OCTOBER 27, 2020 $ in Thousands SIGNIFICANT KNOWN TERMINATIONS Effective ABR per DEFERRED RENT Tenant Property Date SF Impact ABR Impact Leased SF Bed, Bath, & Beyond North Point Center 1/31/2021 30,000 $300,000 $10.00 Repayment Period Bed, Bath, & Beyond Wendover Village 1/31/2021 33,696 404,352 12.00 Deferred Rent (A) (1) Regal Cinemas Columbus Village II 10/20/2020 51,545 995,334 19.31 Outstanding YTG 2020 2021 2022 Regal Cinemas(A) Harrisonburg Regal 10/25/2020 49,000 717,850 14.65 Bi-Lo(A) Socastee Commons 1/31/2021 46,673 492,400 10.55 $2,500 $700 $1,700 $100 Total / Weighted Avg 210,914 $2,909,936 $13.80 Proforma Retail 3Q20 Occupancy Assuming Vacancy of Known Terminations 88.3% Proforma Total 3Q20 Occupancy Assuming Vacancy of Known Terminations 92.9% (A) Vacancy of tenant allows the Company to consider redevelopment of this property Q u a r t e r - O v e r - Quarter Rent Deferral (1) Includes $0.1M of unsigned deferrals that are under negotiation or with the tenant for execution.
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, termination fees 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, other one time adjustments including non-recurring bad debt and termination fees, 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 redevelopment and 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 reoccurring 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 Nine Months Ended Three Months Ended Nine Months Ended 9/30/2020 to 2019 9/30/2020 to 2019 9/30/2020 to 2019 9/30/2020 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 South Retail X X Apex Entertainment X X South Square X X Broad Creek Shopping Center X X Southgate Square X X Broadmoor Plaza X X Southshore Shops X X Brooks Crossing (Retail) X X Studio 56 Retail X X Columbus Village X X Tyre Neck Harris Teeter X X Columbus Village II X X Wendover Village X X Commerce Street Retail X X Wendover Village II X X Courthouse 7-Eleven X X Wendover Village III X X Dimmock Square X X Office Properties Fountain Plaza Retail X X 4525 Main Street X X Greentree Shopping Center X X Armada Hoffler Tower X X Hanbury Village X X Brooks Crossing (Office) X X Harrisonburg Regal X X One City Center X X Lexington Square X X One Columbus X X Market at Mill Creek X X Thames Street Wharf X X Marketplace at Hilltop X X Two Columbus X X Nexton Square X X Wills Wharf X X North Hampton Market X X Multifamily Properties North Point Center X X 1405 Point X X Oakland Marketplace X X Encore Apartments X X Parkway Centre X X Greenside Apartments X X Parkway Marketplace X X Hoffler Place X X Patterson Place X X Johns Hopkins Village X X Perry Hall Marketplace X X Liberty Apartments X X Premier Retail X X Premier Apartments X X Providence Plaza X X Smith’s Landing X X Red Mill Commons X X Summit Place X X Sandbridge Commons X X The Cosmopolitan X X Socastee Commons X X
RECONCILIATION OF ADJUSTED EBITDA, CORE EBITDA, AND CORE DEBT ( 1 ) 34 Three months ended $ IN THOUSANDS 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 Net income attributable to common stockholders and OP unit holders $8,651 $11,178 $8,160 $7,215 $9,869 Excluding: Depreciation and amortization(2) 14,131 13,644 14,092 15,285 15,057 Gain on operating real estate dispositions (3,612) (2,776) - - (3,220) (3) Income tax provision (benefit) (28) 65 (257) (152) (199) Interest expense(2) 7,249 6,904 7,805 8,359 8,624 Change in fair value of interest rate derivatives (318) 6 1,736 (327) 530 Loss on extinguishment of debt - - - 30 - GAAP adjustments related to finance leases 160 158 160 159 166 Non-Recurring Bad Debt 1,100 (4) 450 (5) - - - Unrealized credit loss provision (release) (33) (117) 377 - - Non-cash stock compensation 456 421 1,030 274 323 Adjusted EBITDA(3) $27,756 $29,933 $33,103 $30,843 $31,150 Development/Redevelopment: Premier Retail (223) (207) (210) (115) (159) The Cosmopolitan Apartments (981) (878) (923) (904) - Wills Wharf (633) - - - - Summit Place (388) - - - - Other Development - - - 9 (1,340) Total Development/Redevelopment (2,225) (1,085) (1,133) (1,010) (1,499) Dispositions completed intra-quarter (80) (1,351) - - (226) Acquisitions completed intra-quarter (75) - - - Core EBITDA $25,376 $27,497 $31,970 $29,833 $29,425 Annualized Core EBITDA $101,502 $109,989 $127,880 $119,332 $117,700 Total debt(6) $885,359 $956,726 $1,016,293 $960,819 $951,891 (Less) Development/Redevelopment Premier Retail (8,250) (8,250) (8,250) (8,250) (7,440) The Cosmopolitan Apartments (43,110) (43,309) (43,506) (43,702) (43,896) Wills Wharf (57,585) (53,660) (45,759) (29,154) (17,714) Summit Place (34,615) (32,289) (30,135) (28,824) (26,950) Other Development - - - - (26,597) Total Development/Redevelopment (143,560) (137,508) (127,650) (109,930) (122,597) (Less) Net Acquisitions completed intra-quarter (22,909) - - - - (Less) Cash & restricted cash (79,224) (75,111) (52,788) (43,579) (47,606) Core Debt $639,666 $744,107 $835,855 $807,310 $781,688 (1) See definitions on page 31. (2) Adjusted for the depreciation and interest expense attributable to noncontrolling interests in consolidated investments. (3) Excludes non-recurring items. (4) Bad debt resulting from Company’s decision to terminate two defaulted Regal Cinemas leases. (5) Adjusts bad debt to an annualized $3 million – Management’s Estimates. (6) Excludes GAAP Adjustments.
RECONCILIATION TO PROPERTY PORTFOLIO NOI 35 $ IN THOUSANDS Three months ended 9/30 Nine months ended 9/30 2020 2019 2020 2019 Office Same Store(1) Rental revenues $10,232 $10,283 $15,812 $16,148 Property expenses 3,648 3,739 5,810 5,798 NOI 6,584 6,544 10,002 10,350 Non-Same Store NOI(2) 455 (155) 10,512 4,459 Segment NOI $7,039 $6,389 $20,514 $14,809 Retail Same Store(1) Rental revenues $14,530 $16,686 $36,656 $39,019 Property expenses 3,930 4,057 9,231 9,450 NOI 10,600 12,629 27,425 29,569 Non-Same Store NOI(2) 643 2,836 13,292 13,224 Segment NOI $11,243 $15,465 $40,717 $42,793 Multifamily Same Store(1) Rental revenues $9,152 $8,836 $16,157 $16,299 Property expenses 4,075 3,627 6,666 6,412 NOI 5,077 5,209 9,491 9,887 Non-Same Store NOI(2) 1,294 1,104 9,885 6,746 Segment NOI $6,371 $6,313 $19,376 $16,633 Total Property Portfolio NOI $24,653 $28,167 $80,607 $74,235 (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 GAAP NET INCOME 36 $ IN THOUSANDS Three months ended 9/30/2020 Total Rental General Contracting & Office Retail Multifamily Properties Real Estate Services Total Segment revenues $ 11,456 $ 15,669 $ 12,511 $ 39,636 $ 58,617 $ 98,253 Segment expenses 4,417 4,426 6,140 14,983 56,509 71,492 Net operating income $ 7,039 $ 11,243 $ 6,371 $ 24,653 $ 2,108 $ 26,761 Depreciation and amortization (14,176) General and administrative expenses (2,601) Acquisition, development and other pursuit costs (26) Impairment charges (47) Gain on real estate dispositions 3,612 Interest income 4,417 Interest expense (7,294) Interest expense - finance leases (229) Unrealized credit loss release (provision) 33 Amortization of right-of-use assets - finance leases (147) Change in fair value of derivatives and other 318 Other income 177 Income tax benefit 28 Net income $ 10,826 Net loss attributable to noncontrolling interest in investment entities 45 Preferred stock dividends (2,220) Net income attributable to AHH and OP unit holders $ 8,651 Nine months ended 9/30/2020 Total Rental General Contracting & Office Retail Multifamily Properties Real Estate Services Total Segment revenues $ 32,142 $ 54,794 $ 34,904 $ 121,840 $ 163,283 $ 285,123 Segment expenses 11,628 14,077 15,528 41,233 157,401 198,634 Net operating income $ 20,514 $ 40,717 $ 19,376 $ 80,607 $ 5,882 $ 86,489 Depreciation and amortization (42,232) General and administrative expenses (9,382) Acquisition, development and other pursuit costs (555) Impairment charges (205) Gain on real estate dispositions 6,388 Interest income 16,055 Interest expense (22,252) Interest expense - finance leases (686) Unrealized credit loss release (provision) (227) Amortization of right-of-use assets - finance leases (440) Change in fair value of derivatives and other (1,424) Other income 521 Income tax benefit 220 Net income $ 32,270 Net loss attributable to noncontrolling interest in investment entities 181 Preferred stock dividends (4,462) Net income attributable to AHH and OP Unitholders $ 27,989