Armada Hoffler Properties Inc

Previous wording

We are a vertically-integrated, self-managed REIT with over four decades of experience managing, building, acquiring, and developing high-quality retail, office, and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. In addition to the ownership of our operating property portfolio, we develop and build properties for our own account and through joint ventures between us and unaffiliated partners and also invest in development projects through real estate financing arrangements. We also provide general construction and development services to third-party clients. Our construction and development experience includes mid- and high-rise office buildings, retail strip malls, retail power centers, multifamily apartment communities, hotels and conference centers, single- and multi-tenant industrial, distribution, and manufacturing facilities, educational, medical and special purpose facilities, government projects, parking garages, and mixed-use town centers.

Current wording

We are a vertically-integrated, self-managed REIT with over four decades of experience managing high-quality properties located primarily in the Mid-Atlantic and Southeastern United States. Our focus is to deliver long-term, sustainable shareholder value by consistently investing in and operating the highest-quality assets, maintaining a robust and resilient balance sheet, and fostering a dynamic, highly skilled team. In addition to the ownership of our operating property portfolio, we historically have developed and built properties for our own account and through joint ventures between us and unaffiliated partners and invested in development projects through real estate financing arrangements.

Previous wording

On October 3, 2022, we entered into a $19.6 million preferred equity investment for the development of a multifamily property located in Gainesville, Georgia (Solis Gainesville II). This project is located nearby our recently completed multifamily development project in Gainesville, The Everly. The preferred equity investment has economic and other terms consistent with a note receivable, including a mandatory redemption or maturity on October 3, 2026, and it is accounted for as a note receivable. Our investment bears interest at a rate of 14.0% effective through the first 24 months of the investment. Beginning on October 3, 2024, the investment will bear interest at a rate of 10.0% for 12 months. On October 3, 2025, the investment will again bear interest at a rate of 14.0% through maturity. Additionally, the investment earns an unused commitment fee of 10.0% on the unfunded portion of the investment's maximum loan commitment, effective January 1, 2023, and an equity fee on our commitment of $0.3 million, which is amortized through the date of redemption. Both the interest and unused commitment fee compound annually. The preferred equity investment is subject to a minimum interest guarantee of $5.9 million over the life of the investment, which represents approximately 24 months of interest.

Current wording

On October 3, 2022, we entered into a $19.6 million preferred equity investment for the development of a multifamily property located in Gainesville, Georgia (Solis Gainesville II). This project is located nearby our recently completed multifamily development project in Gainesville, The Everly. The preferred equity investment has economic and other terms consistent with a note receivable, including a mandatory redemption or maturity on October 3, 2026, and it is accounted for as a note receivable. Our investment bore interest at a rate of 14.0% effective through the first 24 months of the investment. Beginning on October 3, 2024, the investment will bear interest at a rate of 10.0% for 12 months. On October 3, 2025, the investment will again bear interest at a rate of 14.0% through maturity. Additionally, the investment earns an unused commitment fee of 10.0% on the unfunded portion of the investment's maximum loan commitment, effective January 1, 2023, and an equity fee on our commitment of $0.3 million, which is amortized through the date of redemption. Both the interest and unused commitment fee compound annually. The preferred equity investment is subject to a minimum interest guarantee of $5.9 million over the life of the investment, which represents approximately 24 months of interest.

Previous wording

On July 10, 2024, we signed an amendment to the operating agreement for the entity through which we own our real estate financing investment with respect to Solis Gainesville II to reduce the preference rate on the investment from 14% to 6% starting on January 1, 2025. We also received a call option to purchase a controlling interest in the entity that owns Solis Gainesville II at fair market value during the period from January 1, 2025 to December 31, 2025, which option also gives us a right of first refusal to buy the property during the same period.

Current wording

On July 10, 2024, we signed an amendment to the operating agreement for the entity through which we own our real estate financing investment with respect to Solis Gainesville II to reduce the preference rate on the investment from 10% to 6% starting on January 1, 2025. We also received a call option to purchase a controlling interest in the entity that owns Solis Gainesville II at fair market value during the period from January 1, 2025 to December 31, 2025, which option also gives us a right of first refusal to buy the property during the same period.

Previous wording

The balance on the Solis Gainesville II note was $24.6 million as of September 30, 2024, which includes $4.8 million of cumulative accrued interest, $0.4 million of cumulative accrued unused commitment fees and a discount of $0.1 million due to unamortized equity fees. During the three and nine months ended September 30, 2024, we recognized $0.8 million and $2.4 million, respectively, of interest income on the note. As of September 30, 2024, this note was fully funded and the development property was approximately 53% leased.

Current wording

The balance on the Solis Gainesville II note was $25.7 million as of March 31, 2025, which includes $5.8 million of cumulative accrued interest, $0.4 million of cumulative accrued unused commitment fees and a discount of $0.1 million due to unamortized equity fees. During the three months ended March 31, 2025, we recognized $0.4 million of interest income on the note. As of March 31, 2025, this note was fully funded and the development property was approximately 84% leased.

Previous wording

The balance on the Solis Kennesaw note was $44.1 million as of September 30, 2024, which includes $3.7 million of cumulative accrued interest, $2.9 million of cumulative accrued unused commitment fees and a discount of $0.4 million due to unamortized equity fees. During the three and nine months ended September 30, 2024, we recognized $1.4 million and $4.0 million, respectively, of interest income on the note.

Current wording

The balance on the Solis Kennesaw note was $47.0 million as of March 31, 2025, which includes $6.6 million of cumulative accrued interest, $2.9 million of cumulative accrued unused commitment fees and a discount of $0.3 million due to unamortized equity fees. During the three months ended March 31, 2025, we recognized $1.4 million of interest income on the note.

Previous wording

The balance on the Solis Peachtree Corners note was $24.5 million as of September 30, 2024, which includes $2.2 million of cumulative accrued interest, $2.0 million of cumulative accrued unused commitment fees and a discount of $0.3 million due to unamortized equity fees. During the three and nine months ended September 30, 2024, we recognized $1.1 million and $2.9 million, respectively, of interest income on the note.

Current wording

The balance on the Solis Peachtree Corners note was $34.8 million as of March 31, 2025, which includes $4.5 million of cumulative accrued interest, $2.1 million of cumulative accrued unused commitment fees and a discount of $0.3 million due to unamortized equity fees. During the three months ended March 31, 2025, we recognized $1.2 million of interest income on the note.

Previous wording

On July 26, 2023, we entered into a $9.2 million preferred equity investment for the development of a multifamily property located in Chesapeake, Virginia ("The Allure at Edinburgh"). The preferred equity investment has economic and other terms consistent with a note receivable, including a mandatory redemption feature effective on January 16, 2028, and it is accounted for as a note receivable. Our investment bears interest at a rate of 15.0%, which does not compound. Upon The Allure at Edinburgh obtaining a certificate of occupancy, the investment will bear interest at a rate of 10.0%. The common equity partner in the development property holds an option to sell the property to us at a predetermined amount if certain conditions are met. We also hold an option to purchase the property at any time prior to maturity of the preferred equity investment, and at the same predetermined amount as the common equity partner's option to sell.

Current wording

On July 26, 2023, we entered into a $9.2 million preferred equity investment for the development of a multifamily property located in Chesapeake, Virginia ("The Allure at Edinburgh"). The preferred equity investment has economic and other terms consistent with a note receivable, including a mandatory redemption feature effective on January 16, 2028, and it is accounted for as a note receivable. Our investment bore interest at a rate of 15.0%, which did not compound. On February 3, 2025, The Allure at Edinburgh obtained a certificate of occupancy, resulting in the investment bearing interest at a rate of 10.0%. The common equity partner in the development property holds an option to sell the property to us at a predetermined amount if certain conditions are met. We also hold an option to purchase the property at any time prior to maturity of the preferred equity investment, and at the same predetermined amount as the common equity partner's option to sell.

Previous wording

The balance on The Allure at Edinburgh note was $10.9 million as of September 30, 2024, which includes $1.6 million of cumulative accrued interest. During the three and nine months ended September 30, 2024, we recognized $0.3 million and $1.0 million, respectively, of interest income on the note. As of September 30, 2024, this note was fully funded.

Current wording

The balance on The Allure at Edinburgh note was $11.5 million as of March 31, 2025, which includes $2.3 million of cumulative accrued interest. During the three months ended March 31, 2025, we recognized $0.3 million of interest income on the note. As of March 31, 2025, this note was fully funded.

Previous wording

On August 8, 2024, the Company signed an amendment to the operating agreement for the entity through which we own our real estate financing investment with respect to Solis North Creek to reduce the equity funding requirement from $27.0 million to $26.8 million and the minimum interest guarantee from $8.9 million to $8.8 million.

Current wording

On August 8, 2024, we signed an amendment to the operating agreement for the entity through which we own our real estate financing investment with respect to Solis North Creek to reduce the equity funding requirement from $27.0 million to $26.8 million and the minimum interest guarantee from $8.9 million to $8.8 million.

Previous wording

The balance on the Solis North Creek note was $2.7 million as of September 30, 2024, which includes less than $0.1 million of cumulative accrued interest and $0.3 million of cumulative accrued unused commitment fees. During each of the three and nine months ended September 30, 2024, we recognized $0.3 million of interest income on the note.

Current wording

The balance on the Solis North Creek note was $9.3 million as of March 31, 2025, which includes $0.4 million of cumulative accrued interest and $0.8 million of cumulative accrued unused commitment fees. During the three months ended March 31, 2025, we recognized $0.4 million of interest income on the note.

Previous wording

Third Quarter 2024 and Recent Highlights

Current wording

First Quarter 2025 and Recent Highlights

Previous wording

•Net loss attributable to common stockholders and holders ("OP Unitholders") of units of limited partnership interest in the Operating Partnership ("OP Units") of $10.4 million, or $0.11 per diluted share, compared to net income attributable to common stockholders and OP Unitholders of $5.3 million, or $0.06 per diluted share, for the three months ended September 30, 2023.

Current wording

•Net loss attributable to common stockholders and holders ("OP Unitholders") of units of limited partnership interest in the Operating Partnership ("OP Units") of $7.2 million, or $0.07 per diluted share, compared to net income attributable to common stockholders and OP Unitholders of $14.8 million, or $0.17 per diluted share, for the three months ended March 31, 2024.

Previous wording

•Funds from operations attributable to common stockholders and OP Unitholders ("FFO") of $12.7 million, or $0.14 per diluted share, compared to $27.6 million, or $0.31 per diluted share, for the three months ended September 30, 2023. See "Non-GAAP Financial Measures."

Current wording

•Funds from operations attributable to common stockholders and OP Unitholders ("FFO") of $17.2 million, or $0.17 per diluted share, compared to $35.0 million, or $0.40 per diluted share, for the three months ended March 31, 2024. See "Non-GAAP Financial Measures."

Previous wording

•Normalized funds from operations attributable to common stockholders and OP Unitholders ("Normalized FFO") of $31.4 million, or $0.35 per diluted share, compared to $27.7 million, or $0.31 per diluted share, for the three months ended September 30, 2023. See "Non-GAAP Financial Measures."

Current wording

•Normalized funds from operations attributable to common stockholders and OP Unitholders ("Normalized FFO") of $25.6 million, or $0.25 per diluted share, compared to $29.4 million, or $0.33 per diluted share, for the three months ended March 31, 2024. See "Non-GAAP Financial Measures."

Previous wording

•As of September 30, 2024, weighted average stabilized portfolio occupancy was 95.4%. Retail occupancy was 96.2%, office occupancy was 94.7%, and multifamily occupancy was 95.3%.

Current wording

•As of March 31, 2025, weighted average stabilized portfolio occupancy was 95.7%. Retail occupancy was 94.5%, office occupancy was 97.5%, and multifamily occupancy was 95.0%.

Previous wording

•Executed 28 lease renewals and 9 new leases during the third quarter for an aggregate of 273,212 of net rentable square feet.

Current wording

•Executed 31 commercial lease renewals and 11 new commercial leases during the first quarter for an aggregate of 313,002 of net rentable square feet.

Previous wording

•Office Same Store NOI increased 6.1% on a GAAP basis compared to the quarter ended September 30, 2023.

Current wording

•Office Same Store Net Operating Income "NOI" increased 9.2% on a GAAP basis compared to the quarter ended March 31, 2024.

Previous wording

•Third-party construction backlog as of September 30, 2024 was$193.1 million and construction gross profit for the third quarter was$3.4 million.

Current wording

•Third-party construction backlog as of March 31, 2025 was $80.4 million and construction gross profit for the first quarter was $1.4 million.

Previous wording

•During the third quarter of 2024, unrealized losses on non-designated interest rate derivatives that negatively affected FFO were $16.7 million. As of September 30, 2024, the value of the Company’s entire interest rate derivative portfolio, net of unrealized losses, was $11.1 million. These losses are excluded from normalized FFO.

Current wording

•During the first quarter of 2025, unrealized losses on non-designated interest rate derivatives that negatively affected FFO were $5.6 million. As of March 31, 2025, the value of the Company’s entire interest rate derivative portfolio, net of unrealized losses, was $13.1 million. These losses are excluded from normalized FFO.

Previous wording

As of September 30, 2024, we operated our business in five segments: (i) retail real estate, (ii) office real estate, (iii) multifamily real estate, (iv) general contracting and real estate services, and (v) real estate financing. Our general contracting and real estate services segment is conducted through our taxable REIT subsidiary ("TRS"). Net operating income ("NOI") is the primary measure used by our chief operating decision-maker to assess segment performance and allocate our resources among our segments. We calculate NOI as segment revenues less segment expenses. Segment revenues include rental revenues for our property segments, general contracting and real estate services revenues for our general contracting and real estate services segment, and interest income for our real estate financing segment. Segment expenses include rental expenses and real estate taxes for our property segments, general contracting and real estate services expenses for our general contracting and real estate services segment, and interest expense for our real estate financing segment. NOI is not a measure of operating income or cash flows from operating activities as measured by accounting principles generally accepted in the United States ("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. Not all companies calculate NOI in the same manner. 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 and construction businesses. See Note 3 to our condensed consolidated financial statements in Item 1 of this Quarterly Report on Form 10-Q for a reconciliation of NOI to net income, the most directly comparable GAAP measure.

Current wording

As of March 31, 2025, we operated our business in five segments: (i) retail real estate, (ii) office real estate, (iii) multifamily real estate, (iv) general contracting and real estate services, and (v) real estate financing. Our general contracting and real estate services segment is conducted through our taxable REIT subsidiary ("TRS"). "NOI" is the primary measure used by our chief operating decision-maker to assess segment performance and allocate our resources among our segments. We calculate NOI as segment revenues less segment expenses. Segment revenues include rental revenues for our property segments, general contracting and real estate services revenues for our general contracting and real estate services segment, and interest income for our real estate financing segment. Segment expenses include rental expenses and real estate taxes for our property segments, general contracting and real estate services expenses for our general contracting and real estate services segment, and interest expense for our real estate financing segment. NOI is not a measure of operating income or cash flows from operating activities as measured by accounting principles generally accepted in the United States ("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. Not all companies calculate NOI in the same manner. 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, construction and real estate financing businesses. See Note 3 to our condensed consolidated financial statements in Item 1 of this Quarterly Report on Form 10-Q for a reconciliation of NOI to net income, the most directly comparable GAAP measure.

Previous wording

We define same store properties as those properties that we owned and operated and that were stabilized for the entirety of both periods presented. 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 occupancy criterion above is again met. A property may also be fully or partially taken out of service as a result of a partial 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 of computing same store operating results.

Current wording

We define same store properties as those properties that we owned and operated and that were stabilized for the entirety of both periods presented. 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 partial 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 of computing same store operating results.

Previous wording

Retail rental revenues, property expenses, and NOI for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

Current wording

Retail rental revenues, property expenses, and NOI for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Previous wording

Retail same store results for the three and nine months ended September 30, 2024 and 2023 exclude Southern Post Retail and Columbus Village II due to redevelopment. Retail same store results for the nine months ended September 30, 2024 and 2023 also exclude Chronicle Mill Retail and The Interlock Retail.

Current wording

Retail same store results for the three months ended March 31, 2025 and 2024 exclude Southern Post Retail, Columbus Village II due to redevelopment, and the Market at Mill Creek and the Nexton Square due to their disposition in December 2024.

Previous wording

Retail rental revenues for the three months ended September 30, 2024 was materially consistent with the three months ended September 30, 2023. Retail rental revenues for the nine months ended September 30, 2024 increased 4.2% compared to the nine months ended September 30, 2023, primarily as a result of the acquisition of The Interlock Retail in May 2023.

Current wording

Retail same store NOI for the three months ended March 31, 2025 was materially consistent with the three months ended March 31, 2024.

Previous wording

Office rental revenues, property expenses, and NOI for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

Current wording

Office rental revenues, property expenses, and NOI for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Previous wording

Office segment NOI for the three and nine months ended September 30, 2024 increased 38.0% and 21.9%, respectively, compared to the three and nine months ended September 30, 2023, primarily due to the receipt of a termination fee from one of our tenants at Wills Wharf and the addition of new tenants at Wills Wharf, as well as the acquisition of The Interlock Office in May 2023.

Current wording

Office segment NOI for the three months ended March 31, 2025 increased $1.7 million or 12.5%, compared to the three months ended March 31, 2024, primarily due to the addition of new tenants at Wills Wharf, Thames Street Wharf, and The Interlock Office .

Previous wording

Office rental revenues for the three and nine months ended September 30, 2024 increased 26.0% and 16.4%, respectively, compared to the three and nine months ended September 30, 2023, primarily due to the receipt of termination fees from one of our tenants at Wills Wharf and the addition of new tenants at Wills Wharf.

Current wording

Office same store NOI for the three months ended March 31, 2025 increased $1.3 million or 9.2%, compared to the three months ended March 31, 2024, primarily due the addition of new tenants at Wills Wharf, Thames Street Wharf, and The Interlock Office.

Previous wording

Multifamily rental revenues, property expenses, and NOI for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

Current wording

Multifamily rental revenues, property expenses, and NOI for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Previous wording

Multifamily same store results for the three and nine months ended September 30, 2024 and 2023 exclude Chandler Residences. Multifamily same store results for the nine months ended September 30, 2024 and 2023 also exclude Chronicle Mill Apartments.

Current wording

Multifamily same store results for the three months ended March 31, 2025 and 2024 exclude Chandler Residences.

Previous wording

General contracting and real estate services revenues, expenses, and gross profit for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

Current wording

General contracting and real estate services revenues, expenses, and gross profit for the three months ended March 31, 2025 and 2024 were as follows ($ in thousands):

Previous wording

(1)50% and 90% of gross profit attributable to our T. Rowe Price Global HQ and Allied | Harbor Point development projects, respectively, is not reflected within general contracting and real estate services revenues due to elimination. The Company is still entitled to receive cash proceeds in relation to the eliminated amounts. Prior to any gross profit eliminations attributable to these projects, operating margin was 3.2% and 3.6% for the three and nine months ended September 30, 2024, respectively, and 3.8% and 3.9% for the three and nine months ended September 30, 2023, respectively.

Current wording

(1)50% and 90% of gross profit attributable to our T. Rowe Price Global HQ and Allied | Harbor Point development projects, respectively, is not reflected within general contracting and real estate services revenues due to elimination. The Company is still entitled to receive cash proceeds in relation to the eliminated amounts. Prior to any gross profit eliminations attributable to these projects, operating margin was 3.1% for the three months ended March 31, 2025, and 3.5% for the three months ended March 31, 2024.

Previous wording

General contracting and real estate services segment gross profit for the three and nine months ended September 30, 2024 increased $0.1 million and $1.9 million, respectively, compared to the three and nine months ended September 30, 2023, primarily due to an increase in work performed in the execution of our backlog and the recognition of savings from unused contingencies for certain contracts.

Current wording

General contracting and real estate services segment gross profit for the three months ended March 31, 2025 decreased $2.7 million, compared to the three months ended March 31, 2024, primarily due to the substantial reduction in our backlog as previously executed projects were completed.

Previous wording

The changes in third party construction backlog for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

Current wording

The changes in third party construction backlog for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Previous wording

As of September 30, 2024, we had$48.0 million in the backlog relating to the Harbor Point Parcel 3 and Harbor Point Parcel 4 developments in Baltimore.

Current wording

As of March 31, 2025, we had $12.2 million in the backlog relating to the Harbor Point Parcel 3 and Harbor Point Parcel 4 developments in Baltimore.

Previous wording

Real estate financing interest income, interest expense, and gross profit for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

Current wording

Real estate financing interest income, interest expense, and gross profit for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Previous wording

The following table summarizes the results of operations for the three and nine months ended September 30, 2024 and 2023 (unaudited, in thousands):

Current wording

The following table summarizes the results of operations for the three months ended March 31, 2025 and 2024 (unaudited, in thousands):

Previous wording

Office same store NOI for the three and nine months ended September 30, 2024 increased 6.1% and 5.6%, respectively, compared to the three and nine months ended September 30, 2023, primarily due to new tenants at Wills Wharf.

Current wording

Office rental revenues for the three months ended March 31, 2025 increased 9.2% compared to the three months ended March 31, 2024, primarily due to new tenants at Wills Wharf, Thames Street Wharf, and The Interlock Office.

Previous wording

Multifamily rental revenues for the three and nine months ended September 30, 2024 increased 2.0% and 3.1%, respectively, compared to the three and nine months ended September 30, 2023, as a result of the commencement of operations at Chandler Residences in April 2024.

Current wording

Multifamily rental revenues for the three months ended March 31, 2025 increased 5.6%, compared to the three months ended March 31, 2024, as a result of the commencement of operations at Chandler Residences in the second quarter of 2024.

Previous wording

General contracting and real estate services revenues for the three and nine months ended September 30, 2024 increased $14.9 million and $71.9 million, respectively, compared to the three and nine months ended September 30, 2023 due to the execution of our backlog and the recognition of savings from unused contingencies for certain contracts.

Current wording

General contracting and real estate services revenues for the three months ended March 31, 2025 decreased $80.4 million compared to the three months ended March 31, 2024 due to the substantial reduction in our backlog as previously executed projects were completed.

Previous wording

Office rental expenses for the three and nine months ended September 30, 2024 increased 6.0% and 8.2%, respectively, compared to the three and nine months ended September 30, 2023, primarily as a result of the acquisition of The Interlock Office in May 2023, increased occupancy at Wills Wharf, and increased occupancy at Constellation Office.

Current wording

Office rental expenses for the three months ended March 31, 2025 increased 4.0% compared to the three months ended March 31, 2024, primarily as a result of the commencement of operations at Southern Post Office, and increased utility expense at Constellation Office and Thames Street Wharf.