Armada Hoffler Properties, Inc.

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 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.

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, after which it bore interest at a rate of 10%. As of January 1, 2025, the investment bears interest at a rate of 6% 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

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.

Current wording

The balance on the Solis Gainesville II note was $26.1 million as of June 30, 2025, which includes $6.1 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 six months ended June 30, 2025, we recognized $0.4 million and $0.8 million, respectively, of interest income on the note. As of June 30, 2025, this note was fully funded and the development property was approximately 95% leased.

Previous wording

On May 25, 2023, we entered into a $37.9 million preferred equity investment for the development of a multifamily property located in Marietta, Georgia. The investment has economic terms consistent with a note receivable, including a mandatory redemption or maturity on May 25, 2027, and it is accounted for as a note receivable. Our investment bears interest at a rate of 14.0% for the first 24 months. Beginning on May 25, 2025, the investment will bear interest at a rate of 9.0% for the following twelve months. On May 25, 2026, the investment will again bear interest at a rate of 14.0% through maturity. The interest compounds annually. We also earn an unused commitment fee of 11.0% on the unfunded portion of the investment's maximum commitment, which does not compound, and an equity fee on our commitment of $0.6 million which is amortized through the date of redemption. The preferred equity investment is subject to a minimum interest guarantee of $13.1 million over the life of the investment, which represents approximately 27 months of interest.

Current wording

On May 25, 2023, we entered into a $37.9 million preferred equity investment for the development of a multifamily property located in Marietta, Georgia. The investment has economic terms consistent with a note receivable, including a mandatory redemption or maturity on May 25, 2027, and it is accounted for as a note receivable. Our investment originally bore interest at a rate of 14.0% for the first 24 months. On May 25, 2025, the investment began bearing interest at a rate of 9.0% for the following twelve months. On May 25, 2026, the investment will again bear interest at a rate of 14.0% through maturity. The interest compounds annually. We also earn an unused commitment fee of 11.0% on the unfunded portion of the investment's maximum commitment, which does not compound, and an equity fee on our commitment of $0.6 million which is amortized through the date of redemption. The preferred equity investment is subject to a minimum interest guarantee of $13.1 million over the life of the investment, which represents approximately 27 months of interest.

Previous 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.

Current wording

The balance on the Solis Kennesaw note was $48.3 million as of June 30, 2025, which includes $7.8 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 and six months ended June 30, 2025, we recognized $1.3 million and $2.7 million, respectively, of interest income on the note. As of June 30, 2025, this note was fully funded.

Previous 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.

Current wording

The balance on the Solis Peachtree Corners note was $36.0 million as of June 30, 2025, which includes $5.7 million of cumulative accrued interest, $2.1 million of cumulative accrued unused commitment fees and a discount of $0.2 million due to unamortized equity fees. During the three and six months ended June 30, 2025, we recognized $1.2 million and $2.5 million, respectively, of interest income on the note. As of June 30, 2025, this note was fully funded.

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 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.

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 originally 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 $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.

Current wording

The balance on The Allure at Edinburgh note was $11.7 million as of June 30, 2025, which includes $2.5 million of cumulative accrued interest. During the three and six months ended June 30, 2025, we recognized $0.2 million and $0.5 million, respectively, of interest income on the note. As of June 30, 2025, this note was fully funded and the development property was approximately 90% leased.

Previous 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.

Current wording

The balance on the Solis North Creek note was $19.7 million as of June 30, 2025, which includes $0.7 million of cumulative accrued interest and $0.9 million of cumulative accrued unused commitment fees. During the three and six months ended June 30, 2025, we recognized $0.5 million and $1.0 million, respectively, of interest income on the note.

Previous wording

First Quarter 2025 and Recent Highlights

Current wording

Second 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 $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.

Current wording

•Net income attributable to common stockholders and holders ("OP Unitholders") of units of limited partnership interest in the Operating Partnership ("OP Units") of $3.9 million, or $0.04 per diluted share, compared to net income attributable to common stockholders and OP Unitholders of $0.4 million, or $0.00 per diluted share, for the three months ended June 30, 2024.

Previous 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."

Current wording

•Funds from operations attributable to common stockholders and OP Unitholders ("FFO") of $19.0 million, or $0.19 per diluted share, compared to $22.4 million, or $0.25 per diluted share, for the three months ended June 30, 2024. See "Non-GAAP Financial Measures."

Previous 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."

Current wording

•Normalized funds from operations attributable to common stockholders and OP Unitholders ("Normalized FFO") of $25.4 million, or $0.25 per diluted share, compared to $30.2 million, or $0.34 per diluted share, for the three months ended June 30, 2024. See "Non-GAAP Financial Measures."

Previous 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%.

Current wording

•As of June 30, 2025, weighted average stabilized portfolio occupancy was 94.9%. Retail occupancy was 94.2%, office occupancy was 96.3%, and multifamily occupancy was 94.0%.

Previous 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.

Current wording

•Executed 16 commercial lease renewals and 10 new commercial leases during the second quarter for an aggregate of 168,197 of net rentable square feet.

Previous wording

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

Current wording

•Same Store Net Operating Income ("NOI") increased 1.4% on a GAAP basis compared to the quarter ended June 30, 2024.

Previous 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.

Current wording

•Third-party construction backlog as of June 30, 2025 was $106.6 million and construction gross profit for the second quarter was $1.4 million.

Previous 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.

Current wording

•During the second quarter of 2025, unrealized losses on non-designated interest rate derivatives that negatively affected FFO were $3.8 million. As of June 30, 2025, the value of the Company’s entire interest rate derivative portfolio, net of unrealized losses, was $8.2 million. These losses are excluded from normalized FFO.

Previous wording

•On April 29, 2025, the Company entered into a binding term sheet with its partner for the Harbor Point Parcel 4 project, which sets forth the terms upon which the Company will acquire the remaining partnership interest of the partner in the joint venture that owns Harbor Point Parcel 4.

Current wording

•On April 29, 2025, we entered into a binding term sheet with our partner for the Harbor Point Parcel 4 project, which set forth the terms upon which we acquired the remaining partnership interest of the partner in the joint venture that owns Harbor Point Parcel 4, also known as Allied | Harbor Point. On June 10, 2025, we completed the transaction. See note 5 of the condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for further details.

Previous wording

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

Current wording

Retail rental revenues, property expenses, and NOI for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

Previous wording

Retail segment NOI for the three months ended March 31, 2025 decreased $1.0 million or 5.5%, compared to the three months ended March 31, 2024, primarily due to the dispositions of the Market at Mill Creek and the Nexton Square properties, partially offset by the commencement of operations at Southern Post Retail.

Current wording

Retail segment NOI for the three and six months ended June 30, 2025 decreased $1.0 million and $2.0 million, or 5.0% and 5.2%, respectively, compared to the three and six months ended June 30, 2024 due to the disposition of the Market at Mill Creek and Nexton Square properties, partially offset by the consolidation of Allied | Harbor Point Retail and the commencement of operations at Southern Post Retail.

Previous 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.

Current wording

Retail same store results for the three and six months ended June 30, 2025 and 2024 exclude Southern Post Retail, Allied | Harbor Point Retail, and Columbus Village II due to redevelopment, and Market at Mill Creek and Nexton Square due to their disposition in December 2024.

Previous wording

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

Current wording

Office rental revenues, property expenses, and NOI for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

Previous wording

Office same store results for the three months ended March 31, 2025 and 2024 exclude Southern Post Office.

Current wording

Office same store results for the three and six months ended June 30, 2025 and 2024 exclude Southern Post Office and Harbor Point Parcel 4 Office Garage.

Previous 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.

Current wording

Office same store NOI for the three and six months ended June 30, 2025 increased $0.2 million and $1.5 million, or 1.6% and 5.3%, respectively, as compared to the three and six months ended June 30, 2024, primarily due to new tenants at The Interlock Office and Wills Wharf Office properties.

Previous wording

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

Current wording

Multifamily rental revenues, property expenses, and NOI for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

Previous wording

Multifamily segment NOI for the three months ended March 31, 2025 was materially consistent with the three months ended March 31, 2024.

Current wording

Multifamily segment NOI for the three and six months ended June 30, 2025 increased $0.5 million and $0.7 million, or 6.0% and 4.2%, respectively, as compared to the three and six months ended June 30, 2024 primarily due to the commencement of operations at Chandler Residences and the consolidation of Allied | Harbor Point.

Previous wording

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

Current wording

Multifamily same store results for the three and six months ended June 30, 2025 and 2024 exclude Chandler Residences and Allied | Harbor Point.

Previous 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):

Current wording

General contracting and real estate services revenues, expenses, and gross profit for the three and six months ended June 30, 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 3.1% for the three months ended March 31, 2025, and 3.5% for the three months ended March 31, 2024.

Current wording

(1)50% of the gross profit attributable to our T. Rowe Price Global HQ project is not reflected within general contracting & real estate services revenues due to elimination. For the Allied | Harbor Point development project, 77% of gross profit was eliminated through

Previous 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.

Current wording

General contracting and real estate services segment gross profit for the three and six months ended June 30, 2025 decreased $3.0 million and $5.7 million, respectively, as compared to the three and six months ended June 30, 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 months ended March 31, 2025 and 2024 were as follows (in thousands):

Current wording

The changes in third party construction backlog for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

Previous 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.

Current wording

As of June 30, 2025, we had $6.2 million in the backlog relating to the Harbor Point Parcel 3 development in Baltimore.

Previous 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):

Current wording

Real estate financing interest income, interest expense, and gross profit for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands):

Previous wording

Real estate financing gross profit for the three months ended March 31, 2025 decreased 24.2%, compared to the three months ended March 31, 2024, primarily due to decreased interest rates for the Solis Gainesville II and The Allure at Edinburgh investments and the redemption of Solis City Park II in July 2024, partially offset by higher principal balances across multiple investments.

Current wording

Real estate financing gross profit for the three and six months ended June 30, 2025 decreased 20.6% and 22.6%, respectively, as compared to the three and six months ended June 30, 2024, primarily due to decreased interest rates for Solis Gainesville II, The Allure at Edinburgh, and Solis Kennesaw, partially offset by higher principal balances for Solis Kennesaw, Solis North Creek, and Solis Peachtree Corners.

Previous wording

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

Current wording

The following table summarizes the results of operations for the three and six months ended June 30, 2025 and 2024 (unaudited, in thousands):

Previous wording

Rental revenues for the three months ended March 31, 2025 increased $1.9 million, or 3.1%, compared to the three months ended March 31, 2024 as follows (in thousands):

Current wording

Rental revenues for the three and six months ended June 30, 2025 increased $1.9 million and $3.8 million, or 3.0% and 3.0%, compared to the three and six months ended June 30, 2024 as follows (in thousands):

Previous wording

Interest income for the three months ended March 31, 2025 decreased 8.6% compared to the three months ended March 31, 2024, primarily due to the payoff of the Solis City Park II investment in July 2024, as well as a decreased interest rate for Solis Gainesville II and The Allure at Edinburgh in 2025, partially offset by increased principal balances for other real estate financing investments.

Current wording

Interest income for the three and six months ended June 30, 2025 decreased $0.5 million and $0.9 million, or 10.6% and 9.6%, respectively, as compared to the three and six months ended June 30, 2024, primarily due to the payoff of the Solis City Park II investment in July 2024, as well as decreased interest rates for Solis Gainesville II, The Allure at Edinburgh, as well as Solis Kennesaw in the first quarter of 2025, partially offset by increased principal balances for other real estate financing investments.

Previous wording

Rental expenses for the three months ended March 31, 2025 increased $1.0 million or 7.0%, compared to the three months ended March 31, 2024 as follows (in thousands):

Current wording

Rental expenses for the three and six months ended June 30, 2025 increased $1.0 million and $2.0 million or 6.6% and 6.8%, respectively, as compared to the three and six months ended June 30, 2024 as follows (in thousands):

Previous wording

Retail real estate taxes for the three months ended March 31, 2025 decreased 4.3% compared to the three months ended March 31, 2024, primarily due to the dispositions of the Market at Mill Creek and Nexton Square properties.

Current wording

Retail real estate taxes for the three and six months ended June 30, 2025 decreased $0.2 million and $0.3 million, or 6.6% and 5.5%, respectively, as compared to the three and six months ended June 30, 2024, primarily due to the dispositions of the Market at Mill Creek and Nexton Square properties, partially offset by the consolidation of Allied | Harbor Point Retail.

Previous wording

General and administrative expenses for the three months ended March 31, 2025 increased 25.7% compared to the three months ended March 31, 2024, primarily due to increased professional fees and the one-time acceleration of the former Chief Executive Officer's performance award for the prior year.

Current wording

General and administrative expenses for the three and six months ended June 30, 2025 increased 33.2% and 29.0%, respectively, as compared to the three and six months ended June 30, 2024, primarily due to severance costs, as well as the one-time acceleration of the former Chief Executive Officer's performance award for the prior year.