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Section 1: 8-K (8-K)

Document


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):  May 1, 2018
 
ARMADA HOFFLER PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
 
Maryland
 
001-35908
 
46-1214914
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
 
222 Central Park Avenue, Suite 2100
 
 
Virginia Beach, Virginia
 
23462
(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:
 
◻    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
◻    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 




Item 2.02.     Results of Operations and Financial Condition.
 
On May 1, 2018, Armada Hoffler Properties, Inc. (the “Company”) issued a press release announcing its financial position as of March 31, 2018, results of operations for the three months ended March 31, 2018 and other related information. Also on May 1, 2018, 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 March 31, 2018. 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
 
 
 
 
 
 
 
 


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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: May 1, 2018
/s/ MICHAEL P. O’HARA
 
Michael P. O’Hara
 
Chief Financial Officer and Treasurer


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EXHIBIT INDEX
 
Exhibit
No.
 
Description
 
 
 
 

 
 
 
 



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1


393273211_ahpropertieslogofullca01.jpg
 
PRESS RELEASE
 
ARMADA HOFFLER PROPERTIES REPORTS FIRST QUARTER 2018 RESULTS

Net Income of $0.11 Per Diluted Share
 
Normalized FFO of $0.25 Per Diluted Share

Company Reaffirmed 2018 Full-Year Normalized FFO Guidance
 
VIRGINIA BEACH, VA, May 1, 2018 – Armada Hoffler Properties, Inc. (NYSE:AHH) today announced its results for the quarter ended March 31, 2018 and provided an update on current events.
 
Highlights include:

Net income of $7.0 million, or $0.11 per diluted share, for the quarter ended March 31, 2018 compared to net income of $8.8 million, or $0.16 per diluted share, for the quarter ended March 31, 2017.
 
Normalized Funds From Operations (“FFO”) of $15.4 million, or $0.25 per diluted share, for the quarter ended March 31, 2018 compared to Normalized FFO of $14.6 million, or $0.26 per diluted share, for the quarter ended March 31, 2017.

FFO of $16.3 million, or $0.26 per diluted share, for the quarter ended March 31, 2018 compared to FFO of $14.8 million, or $0.27 per diluted share, for the quarter ended March 31, 2017.
 
Core operating property portfolio occupancy at 95.6% as of March 31, 2018 compared to 94.2% as of December 31, 2017.

During the first quarter of 2018, positive releasing spreads were 7.8% on a GAAP basis and 3% on a cash basis.

The Board of Directors declared a cash dividend of $0.20 per common share for the first quarter of 2018. This represents a 5.3% increase over the prior quarter's cash dividend and the fourth increase in four years, totaling 25% dividend growth during that period.

Added approximately 132,000 square feet of retail space through the acquisitions of Indian Lakes Crossing, a Harris Teeter-anchored center in Virginia Beach, Virginia and Parkway Centre, a Publix-anchored center in Moultrie, Georgia.

After the end of the quarter, the Company entered into an agreement to sell the Wawa parcel at Indian Lakes Crossing for a 5.35% capitalization rate. Once complete, this will bring the Harris Teeter-anchored center to an approximate 8% capitalization rate overall.
 
Commenting on the Company’s results, Louis Haddad, President and CEO, said, “Next week marks the 5-year anniversary of our IPO. Our growth over the past five years has seen us nearly triple our market cap. We have also more than doubled the total return of the RMS REIT index over the 5-year period. The current environment is one in which our integrated business model typically thrives. We look forward to making several announcements in the near future that will serve to validate our ability to succeed in this economic landscape.”

Financial Results
 
Net income for the first quarter decreased to $7.0 million compared to $8.8 million for the first quarter of 2017. The period-over-period change was primarily due to a $1.7 million decrease in construction segment gross profits, which was driven by both lower revenues and a lower margin in this segment. Additionally, results for the first quarter of

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2017 included a $3.4 million gain on the sale of the Greentree Wawa as compared to no property sales during the first quarter of 2018. These decreases to net income were partially offset by higher interest income and a positive change in the fair value of interest rate derivatives.

Normalized FFO for the first quarter increased to $15.4 million compared to $14.6 million for the first quarter of 2017. FFO for the first quarter increased to $16.3 million compared to $14.8 million for the first quarter of 2017. The period-over-period changes in Normalized FFO and FFO were positively impacted by property acquisitions and higher interest income, which were partially offset by declines in construction segment gross profits and Same Store NOI. The temporary decrease in Same Store NOI was impacted by the relocation and expansion of one office tenant to 4525 Main Street, which is not currently included in the Same Store NOI calculation.
 
Operating Performance
 
At the end of the first quarter, the Company’s office, retail and multifamily core operating property portfolios were 92%, 97% and 96% occupied, respectively.
 
Total construction contract backlog was $30.7 million at the end of the first quarter.

Balance Sheet and Financing Activity
 
As of March 31, 2018, the Company had $595.6 million of total debt outstanding, including $108.0 million outstanding under its revolving credit facility. Total debt outstanding excludes unamortized GAAP fair value adjustments and deferred financing costs. Approximately 37.3% of the Company’s debt had fixed interest rates or were subject to interest rate swaps as of March 31, 2018. After considering LIBOR interest rate caps with strike prices at or below 225 basis points as of March 31, 2018, 91% of the Company’s debt was fixed or hedged.

During the quarter, the Company began to address the five loans originally schedule to mature during 2018. Both of the Columbus Village loans were paid off, and the Sandbridge Commons loan was extended for five years.

Outlook
 
The Company reaffirmed its 2018 full-year guidance and expects 2018 Normalized FFO in the range of $1.00 to $1.05 per diluted share. The following table outlines the Company’s updated assumptions along with Normalized FFO per diluted share estimates for the full-year 2018.
 
Full-year 2018 Guidance [1]
 
Expected Ranges
Total NOI
 
$79.5M

 
$80.2M

Construction company annual segment gross profit
 
$4.4M

 
$7.5M

General and administrative expenses
 
$10.7M

 
$11.0M

Interest income
 
$9.3M

 
$9.5M

Interest expense [2]
 
$19.8M

 
$20.3M

Normalized FFO per diluted share [3]
 

$1.00

 

$1.05


[1] Includes the acquisition of one additional retail center, the disposition of the Wawa outparcel at Indian Lakes Crossing, and additional shares that may be issued under the ATM Program, assuming favorable market conditions.
[2] Interest expense is calculated based on the Forward LIBOR Curve, which forecasts rates rising to 2.25% by year end.
[3] Normalized FFO excludes certain items, including debt extinguishment losses, acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives and other non-comparable items.  See “Non-GAAP Financial Measures.” In addition, the calculation of Normalized FFO per diluted share assumes 63.6 million weighted average shares and units outstanding. 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

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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.
 
Webcast and Conference Call
 
The Company will host a webcast and conference call on Tuesday, May 1, 2018 at 8:30 a.m. Eastern Time to review financial results and discuss recent events. The live webcast will be available through the Investors page of the Company’s website, www.ArmadaHoffler.com.  To participate in the call, please dial 877-407-3982 (domestic) or 201-493-6780 (international).  A replay of the conference call will be available through Friday, June 1, 2018 by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13677669.
 
About Armada Hoffler Properties, Inc.
 
Armada Hoffler Properties, Inc. (NYSE: AHH) is a vertically-integrated, self-managed real estate investment trust ("REIT") with nearly 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. The Company also provides general construction and development services to third-party clients, in addition to developing and building properties to be placed in its stabilized portfolio. 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, financing activities, as well as acquisitions, dispositions 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, 2017, and the other documents filed by the Company with the Securities and Exchange Commission from time to time.
 
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 gains (or losses) from sales of depreciable operating property, real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures.
 
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

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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, debt extinguishment losses and prepayment penalties, property acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives 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)
 
 
 
March 31, 2018
 
December 31, 2017
 
 
(Unaudited)
 
 
ASSETS
 
 
 
 
Real estate investments:
 
 
 
 
Income producing property
 
$
936,579

 
$
910,686

Held for development
 
1,473

 
680

Construction in progress
 
120,850

 
83,071

Accumulated depreciation
 
(171,205
)
 
(164,521
)
Net real estate investments
 
887,697

 
829,916

Cash and cash equivalents
 
15,804

 
19,959

Restricted cash
 
3,502

 
2,957

Accounts receivable, net
 
16,125

 
15,691

Notes receivable
 
88,973

 
83,058

Construction receivables, including retentions
 
21,336

 
23,933

Construction contract costs and estimated earnings in excess of billings
 
315

 
245

Equity method investments
 
12,821

 
11,411

Other assets
 
55,216

 
55,953

Total Assets
 
$
1,101,789

 
$
1,043,123

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Indebtedness, net
 
$
589,634

 
$
517,272

Accounts payable and accrued liabilities
 
11,333

 
15,180

Construction payables, including retentions
 
41,516

 
47,445

Billings in excess of construction contract costs and estimated earnings
 
2,235

 
3,591

Other liabilities
 
40,170

 
39,352

Total Liabilities
 
684,888

 
622,840

Total Equity
 
416,901

 
420,283

Total Liabilities and Equity
 
$
1,101,789

 
$
1,043,123

 


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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
 
 
 
Three Months Ended March 31,
 
 
2018
 
2017
 
 
(Unaudited)
Revenues
 
 
 
 
Rental revenues
 
$
28,699

 
$
27,232

General contracting and real estate services revenues
 
23,050

 
63,519

Total revenues
 
51,749

 
90,751

Expenses
 
 
 
 
Rental expenses
 
6,424

 
6,068

Real estate taxes
 
2,813

 
2,509

General contracting and real estate services expenses
 
22,414

 
61,196

Depreciation and amortization
 
9,278

 
9,475

General and administrative expenses
 
2,961

 
2,986

Acquisition, development and other pursuit costs
 
84

 
47

Impairment charges
 

 
4

Total expenses
 
43,974

 
82,285

Operating income
 
7,775

 
8,466

Interest income
 
2,232

 
1,398

Interest expense
 
(4,373
)
 
(4,535
)
Gain on real estate dispositions
 

 
3,395

Change in fair value of interest rate derivatives
 
969

 
294

Other income
 
114

 
37

Income before taxes
 
6,717

 
9,055

Income tax benefit (provision)
 
266

 
(302
)
Net income
 
6,983

 
8,753

Net income attributable to noncontrolling interests
 
(1,943
)
 
(2,817
)
Net income attributable to stockholders
 
$
5,040

 
$
5,936

Net income per diluted share and unit
 
$
0.11

 
$
0.16

Weighted average shares and units outstanding
 
62,538

 
55,475

  

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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 
 March 31,
 
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
Net income
 
$
6,983

 
$
8,753

Depreciation and amortization
 
9,278

 
9,475

Gain on operating real estate dispositions
 

 
(3,395
)
Funds From Operations (FFO)
 
$
16,261

 
$
14,833

Acquisition, development and other pursuit costs
 
84

 
47

Impairment charges
 

 
4

Change in fair value of interest rate derivatives
 
(969
)
 
(294
)
Normalized FFO
 
$
15,376

 
$
14,590

Net income per diluted share and unit
 
$
0.11

 
$
0.16

FFO per diluted share and unit
 
$
0.26

 
$
0.27

Normalized FFO per diluted share and unit
 
$
0.25

 
$
0.26

Weighted average common shares and units - diluted
 
62,538

 
55,475




 
Contact:
 
Michael P. O’Hara
Armada Hoffler Properties, Inc.
Chief Financial Officer and Treasurer
Email: MOHara@ArmadaHoffler.com
Phone: (757) 366-6684
 



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Section 3: EX-99.2 (EXHIBIT 99.2)

ahh2018supplemental
1 1Q 2018 | SUPPLEMENTAL FINANCIAL PACKAGE


 
2Table of Contents 3 Forward Looking Statements 4 Corporate Profile 5 Highlights 6 2018 Outlook & Assumptions 7 Summary Information 8 Net Asset Value Component Data 9 Summary Balance Sheet 10 Summary Income Statement 11 FFO, Normalized FFO & Adjusted FFO 12 Outstanding Debt 13 Core Debt to Core EBITDA 14 Debt Information 15 Capitalization & Financial Ratios 16 Property Portfolio 18 Development Pipeline 19 Redevelopment and Mezzanine Investments 20 Acquisitions & Dispositions 21 Construction Business Summary 22 Same Store NOI by Segment 23 Top 10 Tenants by Annualized Base Rent 24 Office Lease Summary 25 Office Lease Expirations 26 Retail Lease Summary 27 Retail Lease Expirations 28 Appendix – Definitions & Reconciliations 32 Same Store vs Non-Same Store Properties 33 Reconciliation to Property Portfolio NOI 35 Reconciliation to GAAP Net Income


 
3Forward Looking Statements This Supplemental Financial Package should be read in conjunction with the unaudited condensed consolidated financial statements appearing in our press release dated May 1, 2018, which has been furnished as Exhibit 99.1 to our Form 8-K filed on May 1, 2018. The Company makes statements in this Supplemental financial package that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). In particular, statements pertaining to our capital resources, portfolio performance, development pipeline and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our funds from operations, normalized funds from operations, adjusted funds from operations, and net operating income are forward-looking statements. You can identify forward- looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, estimates, data or methods, which may be incorrect or imprecise, and actual results may vary materially from those anticipated, estimated or projected. The Company does not guarantee that the transactions and events described will happen as described (or that they will happen at all). For further discussion of risk factors and other events that could impact our future results, please refer to the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), and the documents subsequently filed by us from time to time with the SEC.


 
4 Analyst Coverage Corporate Profile Armada Hoffler Properties, Inc. (NYSE:AHH) is a full service real estate company that develops, constructs, acquires and manages institutional-grade office, retail and multifamily properties in the Mid-Atlantic and Southeastern United States. The Company also provides general contracting and development services to third-party clients, in addition to developing and building properties to be placed in its stabilized portfolio. Armada Hoffler Properties, Inc. was founded in 1979 and is headquartered in Virginia Beach, VA. The Company has elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes. Board of Directors Corporate Officers Investor Relations Daniel A. Hoffler A. Russell Kirk Louis S. Haddad John W. Snow George F. Allen James A. Carroll James C. Cherry Eva S. Hardy Executive Chairman of Board Vice Chairman of the Board Director Lead Independent Director Independent Director Independent Director Independent Director Independent Director Louis S. Haddad Michael P. O’Hara Eric L. Smith Eric E. Apperson Shelly R. Hampton President and Chief Executive Officer Chief Financial Officer and Treasurer Chief Operating Officer and Corporate Secretary President of Construction President of Asset Management Michael P. O’Hara (757) 366-6684 Chief Financial Officer and Treasurer mohara@armadahoffler.com Bank of America Merrill Lynch James Feldmen (646) 855-5808 james.feldman@baml.com D. A. Davidson & Co. James O. Lykins (503) 603-3041 jlykins@dadco.com Janney, Montgomery, & Scott LLC Robert Stevenson (646) 840-3217 robertstevenson@janney.com FBR Capital Markets Craig Kucera (703) 862-5249 craigkucera@fbr.com Raymond James & Associates Bill Crow (727) 567-2594 bill.crow@raymondjames.com Robert W. Baird & Co. David Rodgers (216) 737-7341 drodgers@rwbaird.com Stonegate Capital Partners Laura Engel (214) 987-4121 laura@stonegateinc.com Stifel, Nicolaus & Company Inc. John Guinee (443) 224-1307 jwguinee@stifel.com


 
5 Highlights • Net income of $7.0 million, or $0.11 per diluted share, for the quarter ended March 31, 2018 compared to net income of $8.8 million, or $0.16 per diluted share, for the quarter ended March 31, 2017. • Normalized Funds From Operations (“FFO”) of $15.4 million, or $0.25 per diluted share, for the quarter ended March 31, 2018 compared to Normalized FFO of $14.6 million, or $0.26 per diluted share, for the quarter ended March 31, 2017. • FFO of $16.3 million, or $0.26 per diluted share, for the quarter ended March 31, 2018 compared to FFO of $14.8 million, or $0.27 per diluted share, for the quarter ended March 31, 2017. • Core operating property portfolio occupancy at 95.6% as of March 31, 2018 compared to 94.2% as of December 31, 2017. • During the first quarter of 2018, positive releasing spreads were 7.8% on a GAAP basis and 3% on a cash basis. • The Board of Directors declared a cash dividend of $0.20 per common share for the first quarter of 2018. This represents a 5.3% increase over the prior quarter's cash dividend and the fourth increase in four years, totaling 25% dividend growth during that period. • Added approximately 132,000 square feet of retail space through the acquisitions of Indian Lakes Crossing, a Harris Teeter-anchored center in Virginia Beach, Virginia and Parkway Centre, a Publix-anchored center in Moultrie, Georgia. • After the end of the quarter, the Company entered into an agreement to sell the Wawa parcel at Indian Lakes Crossing for a 5.35% capitalization rate. Once complete, this will bring the Harris Teeter-anchored center to an approximate 8% capitalization rate overall.


 
62018 Outlook & Assumptions Guidance Assumptions • Raising $42 million through the ATM program for a full year weighted average share count of 63.6 million • Interest expense is calculated based on the Forward LIBOR Curve, which forecasts rates rising to 2.25% by year end • Acquisition of a retail center in the second half of the year • Disposition of the Wawa parcel at Indian Lakes Crossing at a 5.35% cap rate • Disposition of a newly constructed distribution center in the fourth quarter of 2018 $ in millions, except per share data Outlook Low High Total NOI $79.5M $80.2M Construction Segment Gross Profit $4.4M $7.5M G&A expenses $10.7M $11.0M Interest income $9.3M $9.5M Interest expense $19.8M $20.3M Normalized FFO per diluted share $1.00 $1.05


 
7Summary Information $ in thousands, except per share data (1) Excludes gains on dispositions of real estate and mark-to-market adjustments on interest rate derivatives (2) Includes common shares and OP units (3) Excludes unamortized GAAP adjustments (4) Office and retail occupancy based on leased square feet as a % of respective total (5) Multifamily occupancy based on occupied units as a % of respective total (6) Total occupancy weighted by annualized base rent Three months ended 3/31/2018 12/31/2017 9/30/2017 6/30/2017 3/31/2017 OPERATIONAL METRICS Net income $6,983 $5,768 $10,461 $4,943 $8,753 Net income per diluted share $0.11 $0.09 $0.17 $0.08 $0.16 Rental properties Net Operating Income (NOI) 19,462 18,570 17,573 17,989 18,655 General contracting and real estate services gross profit 636 641 1,824 2,656 2,323 Adjusted EBITDA(1) 19,399 18,345 19,203 19,272 19,376 Funds From Operations (FFO) 16,261 15,071 15,500 14,247 14,833 FFO per diluted share $0.26 $0.24 $0.25 $0.24 $0.27 Normalized FFO 15,376 14,525 15,493 14,724 14,590 Normalized FFO per diluted share $0.25 $0.23 $0.25 $0.25 $0.26 Annualized dividend yield 5.84% 4.89% 5.50% 5.87% 5.47% CAPITALIZATION Total common shares outstanding 45,205 44,938 44,937 44,932 37,813 Operating Partnership units outstanding 17,441 17,486 17,845 17,846 17,859 Common shares and OP units outstanding 62,646 62,424 62,782 62,778 55,672 Market price per common share $13.69 $15.53 $13.81 $12.95 $13.89 Equity market capitalization(2) $857,624 $969,445 $867,019 $812,975 $773,284 Total debt(3) 595,637 523,412 493,493 470,314 527,504 Total market capitalization 1,453,261 1,492,857 1,360,512 1,283,289 1,300,788 Less: cash (19,306) (22,916) (22,916) (21,726) (13,688) Total enterprise value $1,433,955 $1,469,941 $1,337,596 $1,261,563 $1,287,100 BALANCE SHEET METRICS Core Debt/enterprise value 38.4% 33.0% 34.2% 30.9% 32.9% Fixed charge coverage ratio 3.6x 3.5x 3.7x 3.5x 3.6x Core Debt/Annualized Core EBITDA 7.0x 6.6x 6.0x 5.3x 6.0x CORE PORTFOLIO OCCUPANCY Office(4) 92.2% 89.9% 89.2% 89.9% 87.7% Retail (4) 96.7% 96.5% 96.9% 96.8% 96.7% Multifamily(5) 96.1% 92.9% 94.3% 91.6% 92.7% Weighted Average(6) 95.6% 94.2% 94.7% 94.2% 94.3%


 
8 Net Asset Value Component Data in thousands (1) Includes leases for space occupied by Armada Hoffler which are eliminated for GAAP purposes Stabilized Portfolio NOI (Cash) Taxable REIT Subsidiary (TRS) Three months ended Annualized Trailing 12 Months 3/31/2018 3/31/2018 General contracting gross profit $5,757 Diversified Portfolio Office $0 $0 Retail 9,831 39,322 Non-Property Assets Multifamily 2,274 9,097 Non-Property Assets As of 3/31/2018 Total diversified portfolio NOI $12,105 $48,419 Cash and cash equivalents $15,804 Restricted cash 3,502 Virginia Beach Town Center Accounts receivable 16,125 Office(1) $3,065 $12,260 Notes receivable, including mezzanine investments 88,973 Retail (1) 2,171 8,684 Construction receivables, including retentions 21,336 Multifamily 1,584 6,336 Equity method investments (Durham City Center JV) 12,821 Total Virginia Beach Town Center NOI $6,820 $27,280 Other assets 55,531 Land held for development 1,473 Stabilized portfolio NOI - cash basis $18,925 $75,699 Total non-property assets $215,565 Timing of mid-quarter transaction Acquisition $80 $320 Liabilities & Share Count Disposition - - As of 3/31/2018 Total timing mid-quarter transaction $80 $320 Liabilities Mortgages and notes payable $589,634 Signed leases stil l in free rent period $617 $2,468 Accounts payable and accrued liabilities 11,333 Construction payables, including retentions 41,516 Total $19,622 $78,487 Other liabilities 42,405 Total l iabilities $684,888 Development Pipeline 3/31/2018 Share Count Income producing property $24,000 Total common shares outstanding 45,205 Construction in progress 111,000 Total OP units outstanding 17,441 Other assets 1,000 Total common shares & OP units outstanding 62,646 Total cost to date $136,000


 
9Summary Balance Sheet $ in thousands 3/31/2018 12/31/2017 Assets (Unaudited) Real estate investments: Income producing property $936,579 $910,686 Held for development 1,473 680 Construction in progress 120,850 83,071 Accumulated depreciation (171,205) (164,521) Net real estate investments 887,697 829,916 Cash and cash equivalents 15,804 19,959 Restricted cash 3,502 2,957 Accounts receivable, net 16,125 15,691 Notes receivable 88,973 83,058 Construction receivables, including retentions 21,336 23,933 Costs and estimated earnings in excess of bil l ings 315 245 Equity method investments 12,821 11,411 Other assets 55,216 55,953 Total Assets 1,101,789 $1,043,123 Liabilities and Equity Indebtedness, net $589,634 $517,272 Accounts payable and accrued liabilities 11,333 15,180 Construction payables, including retentions 41,516 47,445 Bil l ings in excess of costs and estimated earnings 2,235 3,591 Other l iabilities 40,170 39,352 Total Liabilities 684,888 622,840 Total Equity 416,901 420,283 Total Liabilities and Equity $1,101,789 $1,043,123 As of


 
10Summary Income Statement In thousands, except per share data Three months ended 3/31/2018 3/31/2017 Revenues (Unaudited) Rental revenues $28,699 $27,232 General contracting and real estate services 23,050 63,519 Total Revenues 51,749 90,751 Expenses Rental expenses 6,424 6,068 Real estate taxes 2,813 2,509 General contracting and real estate services 22,414 61,196 Depreciation and amortization 9,278 9,475 General and administrative 2,961 2,986 Acquisition, development & other pursuit costs 84 47 Impairment charges - 4 Total Expenses 43,974 82,285 Operating Income 7,775 8,466 Interest income 2,232 1,398 Interest expense (4,373) (4,535) Gain on real estate dispositions - 3,395 Change in fair value of interest rate derivatives 969 294 Other income 114 37 Income before taxes 6,717 9,055 Income tax benefit (provision) 266 (302) Net Income $6,983 $8,753 Per Diluted Share & Unit $0.11 $0.16 Weighted Average Shares & Units - Diluted 62,538 55,475


 
11 (1) See definitions on pages 29-30 (2) Excludes gain on non-operating real estate of $0.5M for the three months ended 9/30/2017 (3) Excludes development, redevelopment, and first generation space FFO, Normalized FFO & Adjusted FFO(1) $ in thousands, except per share data Three months ended (Unaudited) 3/31/2018 12/31/2017 9/30/2017 6/30/2017 3/31/2017 Funds From Operations Net income $6,983 $5,768 $10,461 $4,943 $8,753 Earnings per diluted share $0.11 $0.09 $0.17 $0.08 $0.16 Depreciation and amortization 9,278 9,303 9,239 9,304 9,475 Gains on dispositions of operating real estate(2) - - (4,200) - (3,395) - FFO $16,261 $15,071 $15,500 $14,247 $14,833 FFO per diluted share $0.26 $0.24 $0.25 $0.24 $0.27 Normalized FFO Acquisition, development & other pursuit costs 84 171 61 369 47 Loss on extinguishment of debt - 50 - - - Impairment charges - 60 19 27 4 Change in fair value of interest rate derivatives (969) (827) (87) 81 (294) Normalized FFO $15,376 $14,525 $15,493 $14,724 $14,590 Normalized FFO per diluted share $0.25 $0.23 $0.25 $0.25 $0.26 Adjusted FFO Non-cash stock compensation 555 276 215 421 411 Acquisition, development & other pursuit costs (84) (171) (61) (369) (47) Tenant improvements, leasing commissions, lease incentives (3) (1,058) (1,115) (707) (895) (943) Property related capital expenditures (1,321) (1,474) (1,167) (840) (442) Non-cash interest expense 326 334 380 283 277 Net effect of straight-line rents (478) (166) (159) (122) (245) Amortization of leasing incentives & above (below) market rents (56) (55) (50) (43) (47) AFFO $13,260 $12,154 $13,944 $13,159 $13,554 Weighted Average Common Shares Outstanding 45,132 44,937 44,934 42,091 37,622 Weighted Average Operating Partnership ("OP") Units Outstanding 17,406 17,490 17,845 17,845 17,853 Total Weighted Average Common Shares and OP Units Outstanding 62,538 62,427 62,779 59,936 55,475


 
12 Debt Maturities & Principal Payments Debt Stated Rate Effective Rate as of 3/31/2018 Maturity Date 2018 2019 2020 2021 2022 Thereafter Outstanding as of 3/31/2018 Secured Notes Payable - Core Debt Johns Hopkins Village L+1.90% 3.78% 7/30/2018 $46,698 $46,698 North Point Center Note 1 6.45% 6.45% 2/5/2019 165 9,352 9,517 Southgate Square L+2.00% 3.88% 4/29/2021 390 561 584 19,024 20,559 249 Central Park Retail L+1.95% 3.83% 8/10/2021 180 252 267 16,094 16,793 South Retail L+1.95% 3.83% 8/10/2021 78 111 117 7,062 7,368 Fountain Plaza Retail L+1.95% 3.83% 8/10/2021 108 152 161 9,689 10,110 Encore Apartments 3.25% 3.25% 9/10/2021 124 504 24,338 24,966 4525 Main Street 3.25% 3.25% 9/10/2021 158 646 31,230 32,034 Hanbury Village 3.78% 3.78% 8/15/2022 373 504 522 544 17,438 19,381 Socastee Commons 4.57% 4.57% 1/6/2023 74 105 109 115 120 4,223 4,746 Sandbridge Commons L+1.75% 3.63% 1/17/2023 172 238 247 257 268 7,247 8,429 North Point Center Note 2 7.25% 7.25% 9/15/2025 86 121 130 140 151 1,804 2,432 Smith's Landing 4.05% 4.05% 6/1/2035 596 822 856 892 928 15,476 19,570 Liberty Apartments 5.66% 5.66% 11/1/2043 182 260 273 291 308 13,317 14,631 The Cosmopolitan 3.35% 3.35% 7/1/2051 559 766 792 819 847 41,243 45,026 Total - Secured Core Debt $49,661 $13,526 $5,208 $110,495 $20,060 $83,310 $282,260 Secured Notes Payable - Development Pipeline Lightfoot Marketplace L+1.75% 3.63% 11/14/2018 10,500 10,500 Harding Place L+2.95% 4.83% 2/24/2020 8,251 8,251 Town Center Block 9 L+3.50% 5.38% 6/29/2020 6,626 6,626 Total - Development Pipeline 10,500 - 14,877 - - - 25,377 Total Secured Notes Payable $60,161 $13,526 $20,085 $110,495 $20,060 $83,310 $307,637 Unsecured Core Debt Senior unsecured line of credit L+1.40% - 2.00% 3.43% 10/26/2021 108,000 108,000 Senior unsecured term loan L+1.35% - 1.95% 3.38% 10/26/2022 130,000 130,000 Senior unsecured term loan L+1.35% - 1.95% 3.50% (1) 10/26/2022 50,000 50,000 Total - Unsecured Core Debt - - - 108,000 180,000 - 288,000 Total Notes Payable excluding GAAP Adjustments $60,161 $13,526 $20,085 $218,495 $200,060 $83,310 $595,637 Weighted Average Interest Rate 3.8% 5.7% 4.8% 3.5% 3.5% 4.0% 3.7% Balloon Payments 57,198 9,333 14,877 214,104 197,109 12,814 505,435 Principal amortization 2,963 4,193 5,208 4,391 2,951 70,496 90,202 Total Consolidated Debt $60,161 $13,526 $20,085 $218,495 $200,060 $83,310 $595,637 Fixed-rate Debt(2) 2,035 12,212 3,832 58,369 69,792 76,063 222,303 Variable-rate Debt(3) 58,126 1,314 16,253 160,126 130,268 7,247 373,334 Total Consolidated Debt $60,161 $13,526 $20,085 $218,495 $200,060 $83,310 $595,637 GAAP Adjustments (6,003) Total Notes Payable $589,634 Outstanding Debt $ in thousands (1) Subject to an interest rate swap lock (2) Includes debt subject to interest rate swap locks (3) Excludes debt subject to interest rate swap locks 30 Day LIBOR as of 3/31/2018 1.883%


 
13Core Debt to Core EBITDA(1) $ in thousands (1) See definitions on page 31 (2) Excludes GAAP Adjustments Three months ended 3/31/2018 12/31/2017 9/30/2017 6/30/2017 3/31/2017 Net Income $6,983 $5,768 $10,461 $4,943 $8,753 Excluding: Interest expense 4,373 4,157 4,253 4,494 4,535 Income tax (266) (56) 29 450 302 Depreciation and amortization 9,278 9,303 9,239 9,304 9,475 (Gain) Loss on real estate dispositions - - (4,692) - (3,395) Change in fair value of interest rate derivatives (969) (827) (87) 81 (294) Adjusted EBITDA $19,399 $18,345 $19,203 $19,272 $19,376 Other adjustments: Loss on extinguishment of debt - 50 - - - Non-cash stock compensation 555 276 215 421 411 Development Pipeline (219) (339) (301) (1,244) (2,154) Total Other Adjustments 336 (13) (86) (823) (1,743) Core EBITDA $19,735 $18,332 $19,117 $18,449 $17,633 Total Debt(2) $595,637 $523,412 $493,493 $470,314 $527,504 Adjustments to Debt: (Less) Development Pipeline(2) (25,377) (15,879) (12,894) (58,942) (90,021) (Less) Cash & restricted cash (19,306) (22,916) (22,916) (21,726) (13,688) Core Debt $550,954 $484,617 $457,683 $389,646 $423,795 Core Debt/Annualized Core EBITDA 7.0x 6.6x 6.0x 5.3x 6.0x


 
14Debt Information $ in thousands (1) Excludes debt subject to interest rate swap locks (2) Includes debt subject to interest rate swap locks (3) Excludes GAAP adjustments Debt Maturities & Principal Payments $0 $50,000 $100,000 $150,000 $200,000 $250,000 2018 2019 2020 2021 2022 2023 and thereafter Total Debt Composition Weighted Average Percent of Debt Interest Rate Maturity Secured vs. Unsecured Debt Unsecured Debt 48.4% 3.4% 4.2 Yrs Secured Debt 51.6% 3.9% 9.1 Yrs Variable vs. Fixed-rate Debt Variable-rate Debt(1) 62.7% 3.6% 3.4 Yrs Fixed-rate Debt(2)(3) 37.3% 3.8% 12.5 Yrs Fixed-rate and Hedged Debt(2)(3) 91.0% Total 3.7% 6.8 Yrs Interest Rate Cap Agreements Effective Date Maturity Date Strike Rate Notional Amount June 17, 2016 June 17, 2018 1.00% $70,000 February 7, 2017 March 1, 2019 1.50% 50,000 June 23, 2017 July 1, 2019 1.50% 50,000 September 18, 2017 October 1, 2019 1.50% 50,000 November 28, 2017 December 1, 2019 1.50% 50,000 March 7, 2018 April 1, 2020 2.25% 50,000 Total Interest Rate Caps 320,000 Fixed-rate Debt(2)(3) 222,303 Fixed-rate and Hedged Debt $542,303 % of Total (3) 91.0% Unencumbered Summary 3/31/2018 % of Total Properties 72.1% % of Annualized Base Rent 57.0%


 
15Capitalization & Financial Ratios $ in thousands Capitalization as of March 31, 2018 Capital Structure as of March 31, 2018 Debt % of Total Carrying Value Unsecured credit facil ity 18% $108,000 Unsecured term Llans 30% 180,000 Mortgages payable 52% 307,637 Total debt $595,637 Equity % of Total Shares/Units Stock Price Market Value Common stock (NYSE: AHH) 72% 45,205 $13.69 $618,856 Common units 28% 17,441 $13.69 238,767 Equity market capitalization 62,646 $857,624 Total market capitalization $1,453,261 Debt/Market capitalization 41.0% Dividend Data Liquidity as of March 31, 2018 Trailing 12 Months Common dividends and distributions $46,521 Cash on hand $19,306 AFFO 52,517 Availability under credit facil ity 39,900 AFFO payout ratio 88.6% Availability under construction loan 112,609 $171,815 Debt 41%Equity 59%


 
16Property Portfolio Net Rentable Square Feet (RSF)(1) Property Anchor Tenant(s) Location Town Center Unencumbered ABR Year Built Core Properties Development Properties Total Core Occupancy(2) Development Leased(2) ABR(3) ABR per Leased SF(3) Retail Properties 249 Central Park Retail (4) Cheesecake Factory, Brooks Brothers, Gordon Biersch Virginia Beach, VA ✓ - 2004 92,710 - 92,710 96.6% - $2,536,599 $28.32 Alexander Pointe Harris Teeter Salisbury, NC 100% 1997 57,710 - 57,710 97.6% - 653,006 11.60 Bermuda Crossroads (6) Food Lion, OfficeMax Chester, VA 100% 2001 122,566 - 122,566 100.0% - 1,733,802 14.15 Broad Creek Shopping Center(6)(10) Home Depot, Food Lion, PetSmart Norfolk, VA 100% 1997/2001 251,504 - 251,504 100.0% - 3,878,305 15.42 Broadmoor Plaza Kroger, Staples, Jo-Ann Fabrics South Bend, IN 100% 1980 115,059 - 115,059 92.2% - 1,251,946 11.81 Brooks Crossing Various Small Shops Newport News, VA 100% 2016 - 18,349 18,349 - 66.3% 169,380 13.92 Columbus Village Barnes & Noble Virginia Beach, VA ✓ 100% 1980/2013 66,594 - 66,594 88.5% - 1,173,679 19.91 Columbus Village II Regal Cinemas, BB&B Virginia Beach, VA ✓ 100% 1995/1996 92,061 - 92,061 100.0% - 1,652,246 17.95 Commerce Street Retail (5) Yard House Virginia Beach, VA ✓ 100% 2008 19,173 - 19,173 100.0% - 862,176 44.97 Courthouse 7-Eleven 7-Eleven Virginia Beach, VA 100% 2011 3,177 - 3,177 100.0% - 139,311 43.85 Dick's at Town Center Dick's Sporting Goods, USI Virginia Beach, VA ✓ 100% 2002 103,335 - 103,335 100.0% - 1,241,201 12.01 Dimmock Square Best Buy, Old Navy Colonial Heights, VA 100% 1998 106,166 - 106,166 97.2% - 1,751,738 16.98 Fountain Plaza Retail Ruth's Chris, Ann Taylor Virginia Beach, VA ✓ - 2004 35,961 - 35,961 100.0% - 1,014,132 28.20 Gainsborough Square Food Lion, Rite Aid Chesapeake, VA 100% 1999 88,862 - 88,862 92.5% - 1,243,905 15.14 Greentree Shopping Center Various Small Shops Chesapeake, VA 100% 2014 15,719 - 15,719 83.7% - 264,750 20.12 Hanbury Village(6) Harris Teeter, Walgreens Chesapeake, VA 32% 2006/2009 116,635 - 116,635 98.6% - 2,474,547 21.51 Harper Hill Commons (6) Harris Teeter Winston-Salem, NC 100% 2004 96,914 - 96,914 80.5% - 897,209 11.50 Harrisonburg Regal Regal Cinemas Harrisonburg, VA 100% 1999 49,000 - 49,000 100.0% - 683,550 13.95 Indian Lakes Harris Teeter, Wawa Virginia Beach, VA 100% 2008 71,020 - 71,020 95.4% - 1,072,561 15.83 Lightfoot Marketplace(6) Harris Teeter, CHKD Williamsburg, VA - 2016 - 116,043 116,043 - 79.0% 1,555,132 16.96 North Hampton Market PetSmart, Hobby Lobby Taylors, SC 100% 2004 114,935 - 114,935 99.0% - 1,445,899 12.71 North Point Center(6) Kroger, PetSmart, Home Depot, Costco Durham, NC 67% 1998/2009 496,246 - 496,246 99.7% - 3,747,254 7.57 Oakland Marketplace(6) Kroger Oakland, TN 100% 2004 64,600 - 64,600 97.8% - 456,780 7.23 Parkway Centre Publix Moultrie, GA 100% 2017 61,200 - 61,200 92.2% - 743,616 13.18 Parkway Marketplace Rite Aid Virginia Beach, VA 100% 1998 37,804 - 37,804 100.0% - 763,628 20.20 Patterson Place BB&B, PetSmart, DSW, AC Moore Durham, NC 100% 2004 160,942 - 160,942 96.1% - 2,434,084 15.73 Perry Hall Marketplace Safeway Perry Hall, MD 100% 2001 74,256 - 74,256 100.0% - 1,252,304 16.86 Providence Plaza Cranfil l , Sumner & Hartzog, Chipotle Charlotte, NC 100% 2007/2008 103,118 - 103,118 97.5% - 2,645,055 26.32 Renaissance Square Harris Teeter Davidson, NC 100% 2008 80,467 - 80,467 84.3% - 1,154,097 17.02 Sandbridge Commons (6) Harris Teeter Virginia Beach, VA - 2015 69,417 - 69,417 100.0% - 913,443 13.16 Socastee Commons Bi-Lo Myrtle Beach, SC - 2000/2014 57,273 - 57,273 100.0% - 657,312 11.48 South Retail lululemon, free people, CPK Virginia Beach, VA ✓ - 2002 38,515 - 38,515 100.0% - 954,156 24.77 South Square(6) Ross, Petco, Office Depot Durham, NC 100% 1977/2005 109,590 - 109,590 100.0% - 1,897,370 17.31 Southgate Square Burlington, PetSmart, Michaels Colonial Heights, VA - 1991/2016 220,131 - 220,131 92.1% - 2,773,889 13.69 Southshore Shops Buffalo Wild Wings Midlothian, VA 100% 2006 40,333 - 40,333 93.2% - 765,980 20.37 Stone House Square(6) Weis Markets Hagerstown, MD 100% 2008 112,274 - 112,274 90.7% - 1,752,315 17.21 Studi 56 Retail McCormick & Schmick's Virginia Beach, VA ✓ 100% 2007 11,594 - 11,594 100.0% - 418,009 36.05 Tyre Neck Harris Teeter(6)(10) Harris Teeter Portsmouth, VA 100% 2011 48,859 - 48,859 100.0% - 533,052 10.91 Waynesboro Commons Kroger Waynesboro, VA 100% 1993 52,415 - 52,415 100.0% - 433,546 8.27 Wendover Village BB&B, T.J. Maxx, Petco Greensboro, NC 100% 2004 171,653 - 171,653 100.0% - 3,101,318 18.07 Total / Weighted Avg Retail Portfolio 76% 3,629,788 134,392 3,764,180 96.7% 77.3% $55,092,282 $15.24 As of March 31, 2018


 
17 Net Rentable Square Feet (RSF)(1) Property Anchor Tenant Location Town Center Unencumbered ABR Year Built Core Properties Development Properties Total Core Occupancy(2) Development Leased(2) ABR(3) ABR per Leased SF(3) Office Properties 4525 Main Street Clark Nexsen, Anthropologie, Mythics Virginia Beach, VA ✓ - 2014 237,893 - 237,893 93.1% - $6,229,535 $28.13 Armada Hoffler Tower(4)(5) AHH, Troutman Sanders, Will iams Mullen Virginia Beach, VA ✓ 100% 2002 324,242 - 324,242 93.6% - 8,824,034 29.07 One Columbus (5) BB&T, HBA Virginia Beach, VA ✓ 100% 1984 129,272 - 129,272 95.0% - 2,999,277 24.43 Two Columbus The Art Institute Virginia Beach, VA ✓ 100% 2009 108,448 - 108,448 82.5% - 2,372,732 26.53 Total / Weighted Average Office Portfolio 70% 799,855 - 799,855 92.2% - $20,425,577 $27.71 Units Multifamily Location Town Center Unencumbered ABR Year Built Core Properties Redevelopment Properties Total Core Occupancy (2) Redevelopment Occupancy(2) ABR (7) Monthly Rent per Occupied Unit Encore Apartments Virginia Beach, VA ✓ - 2014 286 - 286 95.1% - $4,214,196 $1,291.11 Johns Hopkins Village(8)(9) Baltimore, MD - 2016 157 - 157 98.8% - 6,651,169 987.99 (10) Liberty Apartments (9) Newport News, VA - 2013 197 - 197 89.9% - 2,262,936 1,065.03 Smith's Landing(9) Blacksburg, VA - 2009 284 - 284 100.0% - 3,875,748 1,137.25 The Cosmopolitan(8)(11) Virginia Beach, VA ✓ - 2006 - 307 307 - 99.3% 5,652,177 1,544.31 Total / Weighted Avg Multifamily Portfolio - 924 307 1,231 96.1% 99.3% $22,656,226 $1,246.26 (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 March 31, 2018, 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 March 31, 2018, divided by (b) total units available, expressed as a percentage. (3) For the properties in our office and retail 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 March 31, 2018 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 March 31, 2018. 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) As of March 31, 2018, the Company occupied 41,103 square feet at these two properties at an ABR of $1.3M, or $30.59 per leased square foot, which amounts are reflected in this table. The rent paid by us is eliminated in accordance with GAAP. (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 to the right: (7) For the properties in our multifamily portfolio, annualized base rent, or ABR, is calculated by multiplying (a) base rental payments for the month ended March 31, 2018 by (b) 12. (8) The ABR for Liberty, Cosmopolitan, Johns Hopkins Village excludes $245K, $675K and $1.2M from ground floor retail leases, respectively. (9) The Company leases the land underlying this property pursuant to a ground lease. (10) Monthly rent per occupied unit is calculated by dividing total base rental payments for the month ended March 31, 2018 by the number of occupied beds. (11) Excludes 35 units offline for redevelopment. Property Portfolio - Continued Properties Subject to Ground Lease Number of Ground Leases Square Footage Leased Pursuant to Ground Leases ABR Bermuda Crossroads 2 11,000 $170,610 Broad Creek Shopping Center 6 23,825 632,401 Hanbury Village 2 55,586 1,082,118 Harper Hill Commons 1 41,520 373,680 Indian Lakes 2 56,358 828,335 Lightfoot Marketplace 1 51,750 543,375 North Point Center 4 280,556 1,130,718 Oakland Marketplace 1 45,000 186,300 Sandbridge Commons 1 53,288 583,000 South Square 1 1,778 60,000 Stone House Square 1 3,650 165,000 Tyre Neck Harris Teeter 1 48,859 533,052 Total / Weighted Avg 23 673,170 $6,288,590 As of March 31, 2018


 
18Development Pipeline $ in thousands Premier Summit Place One City Center (1) Represents estimates that may change as the development process proceeds (2) First full stabilized quarter (3) AHH earns a preferred return on equity prior to any distributions to JV Partners Schedule(1) Development, Not Delivered Property Type Estimated(1) % Leased Construction Start Initial Occupancy Stabilized Operation(2) Estimated Cost(1) Construction Loan Commitment Cost to Date AHH Ownership % Summit Place (Meeting Street) Charleston, SC Multifamily 114 units NA 3Q17 3Q19 3Q19 $53,000 $34,750 $18,000 90% Hoffler Place (King Street) Charleston, SC Multifamily 74 units NA 3Q17 3Q19 3Q19 48,000 31,750 17,000 93% Greenside (Harding Place) Charlotte, NC Multifamily 225 Units NA 3Q16 3Q18 1Q20 47,000 29,750 36,000 80%(3) Premier (Town Center Phase VI) Virginia Beach, VA Mixed-use 39,000 SF 131 Units 47% 4Q16 3Q18 3Q19 43,000 27,933 31,000 100% Market at Mill Creek Mt. Pleasant, SC Retail 73,000 SF 80% 1Q18 1Q19 1Q19 23,000 - 5,000 70%(3) Brooks Crossing Newport News, VA Office 100,000 sf 100% 1Q18 1Q19 2Q19 22,000 - 3,000 65%(3) Lightfoot Outparcel Will iamsburg, VA Retail NA 90% 1Q18 1Q19 1Q19 4,000 - 1,000 70%(3) Total Development, Not Delivered $240,000 $124,183 $111,000 Development, Delivered Not Stabilized Brooks Crossing Newport News, VA Retail 18,000 sf 66% 3Q15 3Q16 4Q18 3,000 - 3,000 65%(3) Lightfoot Marketplace Will iamsburg, VA Retail 109,000 sf 79% 3Q14 3Q16 3Q18 25,000 10,500 22,000 70%(3) Total Development, Delivered Not Stabilized 28,000 10,500 25,000 Total $268,000 $134,683 $136,000 Joint Ventures - Minority Partner Project Cost Construction Loan Commitment Equity Investment One City Center - 37% JV Durham, NC Office 153,000 sf 81% 1Q16 3Q18 4Q18 $44,000 $25,250 $13,000 100% Q1 2018 Capitalized Interest $791 Capitalized Overhead $726


 
19Redevelopment and Mezzanine Investments $ in thousands 1405 Point The Residences at Annapolis Junction North Decatur Square (1) Represents estimates that may change as the development process proceeds (2) Transactions may occur resulting in the satisfaction of Note prior to maturity Schedule(1) Redevelopment Property Type Units Out of Service % Leased Construction Start Anticipated Completion Same-Store Sales Estimated Cost(1) Cost to Date The Cosmopolitan Virginia Beach, VA Multifamily 35 units 99% 1Q18 4Q19 1Q21 $7,500 $0 Mezzanine Investments Property Type Estimated(1) % Leased Initial Occupancy Loan Maturity (2) Interest Rate Option to Purchase Loan Balance Mezzanine Interest QTD 1405 Point (Point Street Apartments) Baltimore, MD Multifamily 289 units 39% 1Q18 3Q21 8% $98,000 $23,000 $486 The Residences at Annapolis Junction Annapolis Junction, MD Multifamily 416 units 44% 3Q17 2Q20 10% 106,000 44,000 1,100 North Decatur Square (Whole Foods) Decatur, GA Retail 86,000 sf 93% 1Q19 2Q22 15% - 15,000 460 Delray Plaza (Whole Foods) Delray Beach, FL Retail 83,000 sf 79% 3Q19 4Q20 15% - 6,000 222 Total Mezzanine Investment $204,000 $88,000 $2,268


 
20Acquisitions & Dispositions $ in thousands (1) Contractual purchase price (2) Value of OP Units/Stock at issuance (3) Anchor tenant vacated 12/31/16, which would represent a 2.5% Cash Cap Rate ACQUISITIONS Properties Location Square Feet Purchase Price(1) Reinvested 1031 Proceeds $ Value of OP Units/Stock(2) Cash Cap Rate Purchase Date Anchor Tenants 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 House Square Maryland 182,949 39,555 15,200 4,155 7.4% 2Q15 Safeway & Weis Markets Dimmock Square Colonial Heights, VA 106,166 19,662 - 9,662 7.3% 3Q14 Old Navy, Best Buy, Pier 1 Total/Weighted Average 2,199,341 $416,772 $127,700 $75,626 7.1% DISPOSITIONS Properties Location Square Feet/Units Sale Price Cash Proceeds Gain on Sale Cash Cap Rate Disposition Date Anchor Tenants 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 Newport News, VA 100,139 6,500 - 3,793 16.4% (3) 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 768,520 sf/ 203 units $205,075 $152,200 $58,635 7.2%


 
21Construction Business Summary $ in thousands Gross Profit Summary Q1 2018 Trailing 12 Months Revenue $23,050 $153,565 Expense (22,414) (147,808) Gross Profit $636 $5,757 (Unaudited) Location Total Contract Value Work in Place as of 3/31/2018 Backlog Estimated Date of Completion Highlighted Projects One City Center Durham, NC $65,422 $53,912 $11,510 3Q 2018 Dinwiddie Municipal Complex Dinwiddie, VA 23,904 14,002 9,902 2Q 2019 Sub Total $89,326 $67,914 $21,412 All Other Projects $527,764 $518,443 $9,321 Total $617,090 $586,357 $30,733


 
22 (1) See page 32 for Same Store vs. Non – Same Store Properties (2) Excludes expenses associated with the Company’s in house asset management division of $820K for the 3 months ended 3/31/18 and $770K for the 3 months ended 3/31/17. Same Store NOI by Segment $ in thousands (Reconciliation to GAAP located in appendix pg. 35) Three months ended 3/31/2018 3/31/2017 $ Change % Change Office(1) (Unaudited) Revenue $3,454 $3,514 ($60) -1.7% Expenses (2) 1,345 1,232 113 9.2% Net Operating Income 2,109 2,282 (173) -7.6% Retail(1) Revenue 15,424 15,222 202 1.3% Expenses (2) 3,807 3,579 228 6.4% Net Operating Income 11,617 11,643 (26) -0.2% Multifamily(1) Revenue 2,854 2,837 17 0.6% Expenses (2) 1,157 1,151 6 0.5% Net Operating Income 1,697 1,686 11 0.7% Same Store Net Operating Income (NOI) $15,423 $15,611 ($188) -1.2% Net effect of straight-line rents 114 27 87 Amortization of lease incentives and above (below) market rents (105) (107) 2 Same store portfolio NOI, cash basis $15,432 $15,531 ($99) -0.6% NOI, Cash Basis: Office $2,175 $2,506 ($331) -13.2% Retail 11,548 11,327 221 2.0% Multifamily 1,708 1,697 11 0.6% $15,431 $15,530 ($99) -0.6% NOI: Office $2,109 $2,282 ($173) -7.6% Retail 11,617 11,643 (26) -0.2% Multifamily 1,697 1,686 11 0.7% $15,423 $15,611 ($188) -1.2%


 
23Top 10 Tenants by Annualized Base Rent $ in thousands As of March 31, 2018 Office Portfolio Tenant Number of Leases Lease Expiration Annualized Base Rent % of Office Portfolio Annualized Base Rent % of Total Portfolio Annualized Base Rent Clark Nexsen 1 2029 $ 2,536 12.4% 2.6% Hampton University 2 2023 - 2024 1,054 5.2% 1.1% Mythics 1 2030 1,052 5.2% 1.1% Pender & Coward 1 2030 882 4.3% 0.9% Kimley-Horn 1 2027 859 4.2% 0.9% Troutman Sanders 2 2025 855 4.2% 0.9% The Art Institute 3 2019 852 4.2% 0.9% City of Va Beach Development Authority 1 2024 722 3.5% 0.7% Cherry Bekaert 1 2022 708 3.5% 0.7% Williams Mullen 1 2028 655 3.2% 0.7% Top 10 Total $ 10,175 49.9% 10.5% Retail Portfolio Tenant Number of Leases Lease Expiration Annualized Base Rent % of Retail Portfolio Annualized Base Rent % of Total Portfolio Annualized Base Rent Kroger/Harris Teeter 12 2018 - 2036 $ 6,423 11.7% 6.5% Home Depot 2 2019 - 2023 2,236 4.1% 2.3% Regal Cinemas 2 2019 - 2022 1,679 3.0% 1.7% Bed, Bath, & Beyond 4 2020 - 2024 1,677 3.0% 1.7% PetSmart 5 2020 - 2022 1,438 2.6% 1.5% Food Lion 3 2019 - 2022 1,291 2.3% 1.3% Dick's Sporting Goods 1 2020 840 1.5% 0.9% Safeway 2 2021 821 1.5% 0.8% Weis Markets 1 2028 802 1.5% 0.8% Ross Dress for Less 2 2020 - 2022 762 1.4% 0.8% Top 10 Total $ 17,969 32.6% 18.3%


 
24Office Lease Summary (1) Excludes new leases from properties in development Renewal Lease Summary GAAP Cash Quarter Number of Leases Signed Net rentable SF Signed Leases Expiring Net rentable SF Expiring Contractual Rent per SF Prior Rent per SF Releasing Spread Contractual Rent per SF Prior Rent per SF Releasing Spread Weighted Average Lease Term (yrs) TI & LC TI & LC per SF Q1 2018 1 1,400 - - 27.22$ 23.99$ 13.5% 27.24$ 26.45$ 3.0% 3.00 2,428$ 1.73$ Q4 2017 6 38,387 2 2,582 24.87 23.93 3.9% 24.38 25.88 -5.8% 4.90 617,475 16.09 Q3 2017 2 10,454 - - 25.06 24.82 1.0% 25.21 25.46 -1.0% 4.24 48,791 4.67 Q2 2017 2 13,420 - - 27.94 27.22 2.7% 27.38 28.42 -3.7% 7.21 153,873 11.47 New Lease Summary(1) Quarter Number of Leases Signed Net rentable SF Signed Cash Contractual Rent per SF Weighted Average Lease Term (yrs) TI & LC TI & LC per SF Q1 2018 3 17,668 23.59$ 8.28 930,376$ 52.66$ Q4 2017 2 7,676 24.86 4.60 278,339 36.26 Q3 2017 1 2,690 24.50 5.00 95,630 35.55 Q2 2017 2 7,541 24.39 4.36 259,901 34.47


 
25Office Lease Expirations (1) Includes new leases from properties in development 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 Leased Square Feet % ABR of Office Portfolio Year of Lease Expiration Number of Leases Expiring Square Footage of Leases Expiring(1) % Portfolio Net Rentable Square Feet Annualized Base Rent % of Portfolio Annualized Base Rent Annualized Base Rent per Leased Square Foot Available - 62,720 7.8% -$ - -$ M-T-M 3 633 0.1% 20,400 0.1% 32.23 2018 10 39,734 5.0% 1,256,716 6.2% 31.63 2019 14 83,018 10.4% 2,107,955 10.3% 25.39 2020 7 26,537 3.3% 743,109 3.6% 28.00 2021 8 46,798 5.9% 1,301,888 6.4% 27.82 2022 10 75,200 9.4% 2,096,512 10.3% 27.88 2023 9 72,805 9.1% 1,874,882 9.2% 25.75 2024 4 70,617 8.8% 2,070,299 10.1% 29.32 2025 6 66,487 8.3% 1,836,317 9.0% 27.62 2026 3 15,140 1.9% 329,509 1.6% 21.76 2027 3 49,081 6.1% 1,398,926 6.8% 28.50 2028 2 34,945 4.4% 919,342 4.5% 26.31 Thereafter 3 156,140 19.5% 4,469,722 21.9% 28.63 Total / Weighted Average 82 799,855 100.0% 20,425,577$ 100.0% 27.71$ As of March 31, 2018 Square Feet Under Lease % of Portfolio ABR 2,500 or less 3.0% 2,501-10,000 20.7% 10,001-20,000 30.4% 20,001-40,000 33.4% 40,001-100,000 12.5% Office Portfolio Total 100.0%


 
26Retail Lease Summary (1) Excludes new leases from properties in development Renewal Lease Summary GAAP Cash Quarter Number of Leases Signed Net rentable SF Signed Leases Expiring Net rentable SF Expiring Contractual Rent per SF Prior Rent per SF Releasing Spread Contractual Rent per SF Prior Rent per SF Releasing Spread Weighted Average Lease Term (yrs) TI & LC TI & LC per SF Q1 2018 19 61,029 3 9,700 21.14$ 19.65$ 7.6% 20.47$ 19.88$ 3.0% 6.33 433,976$ 7.11$ Q4 2017 16 109,639 13 35,575 13.88 13.31 4.3% 13.70 13.63 0.5% 3.81 64,673 0.59 Q3 2017 10 39,610 5 9,695 17.59 16.19 8.6% 17.41 16.37 6.4% 3.98 126,239 3.19 Q2 2017 14 73,961 7 14,087 19.46 18.75 3.8% 19.60 18.85 3.9% 3.78 93,362 1.26 New Lease Summary(1) Quarter Number of Leases Signed Net rentable SF Signed Cash Contractual Rent per SF Weighted Average Lease Term (yrs) TI & LC TI & LC per SF Q1 2018 5 14,196 15.57$ 5.10 223,542$ 15.75$ Q4 2017 4 12,533 17.02 8.33 181,649 14.49 Q3 2017 4 7,024 15.72 4.85 68,422 9.74 Q2 2017 9 14,315 20.66 7.65 376,170 26.28


 
27Retail Lease Expirations (1) Includes new leases from properties in development Year of Lease Expiration Number of Leases Expiring Square Footage of Leases Expiring(1) % Portfolio Net Rentable Square Feet Annualized Base Rent % of Portfolio Annualized Base Rent Annualized Base Rent per Leased Square Foot Available - 148,735 4.0% -$ - -$ M-T-M 3 2,728 0.1% 49,190 0.1% 18.03 2018 44 141,597 3.8% 2,463,125 4.5% 17.40 2019 86 576,504 15.3% 9,091,761 16.5% 15.77 2020 76 581,371 15.4% 8,135,904 14.8% 13.99 2021 62 293,348 7.8% 5,306,908 9.6% 18.09 2022 55 415,682 11.0% 6,781,045 12.3% 16.31 2023 40 380,812 10.1% 5,282,494 9.6% 13.87 2024 20 181,126 4.8% 2,877,184 5.2% 15.88 2025 18 229,957 6.1% 2,462,076 4.5% 10.71 2026 19 166,665 4.4% 2,887,074 5.2% 17.32 2027 17 117,733 3.1% 2,656,495 4.8% 22.56 2028 13 233,722 6.2% 2,967,989 5.4% 12.70 Thereafter 13 294,200 7.9% 4,131,037 7.5% 14.04 Total / Weighted Average 466 3,764,180 100.0% 55,092,282$ 100.0% 15.24$ Square Feet Under Lease % of Portfolio ABR 2,500 or less 13.0% 2,501-10,000 28.3% 10,001-20,000 15.1% 20,001-40,000 15.4% 40,001-100,000 23.3% Greater than 100,000 4.9% Retail Portfolio Total 100.0% As of March 31, 2018 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Leased Square Feet % ABR of Retail Portfolio


 
28 Appendix Definitions & Reconciliations


 
29Definitions Net Operating Income: We calculate Net Operating Income (“NOI”) as property revenues (base rent, expense reimbursements and other revenue) less property expenses (rental expenses and real estate taxes). Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to such other REITs’ NOI. NOI is not a measure of operating income or cash flows from operating activities as measured by GAAP and is not indicative of cash available to fund cash needs. As a result, NOI should not be considered an alternative to cash flows as a measure of liquidity. We consider NOI to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of our real estate business. To calculate NOI on a cash basis, we adjust NOI to exclude the net effects of straight-line rent and the amortization of lease incentives and above/below market rents. Funds From Operations: We calculate Funds From Operations (“FFO”) in accordance with the standards established by the National Association of Real Estate Investment Trusts (“Nareit”). Nareit defines FFO as net income (loss) (calculated in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains (or losses) from sales of depreciable operating property, real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. 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.


 
30Definitions 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 charges, mark-to-market adjustments on interest rate derivatives 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. 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, straight-line rents, 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.


 
31Definitions 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 and mark- to-market adjustments on interest rate derivates. 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 EBITDA, excluding certain items, including, but not limited to, debt extinguishment losses, mark-to-market adjustments on interest rate derivatives, non-cash stock compensation and the impact of development pipeline projects that are still in lease-up. We generally consider a property to be in lease-up until the earlier of (i) the quarter after which the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy. Management believes that Core EBITDA provides useful supplemental information to investors regarding our ongoing operating performance as it provides a consistent comparison of our operating performance across time periods and allows investors to more easily compare our operating results with other REITs. However, other REITs may use different methodologies for calculating Core EBITDA or similarly entitled measures and, accordingly, our Core EBITDA may not always be comparable to Core EBITDA or other similarly entitled measures of other REITs. Core Debt: We calculate Core Debt as our total debt, excluding loans associated with our development pipeline, cash & cash equivalents, and restricted cash. Same Store Portfolio: We define same store properties as those that we owned and operated for the entirety of the comparative periods presented. 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. 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 and the assets are placed back into service. The following table shows the properties included in the same store and non-same store portfolio for the comparative periods presented.


 
32Same Store vs. Non-Same Store Properties Same Store Non-Same Store Same Store Non-Same Store Retail Properties Retail Properties (Continued) 249 Central Park Retail X Providence Plaza X Alexander Pointe X Renaissance Square X Bermuda Crossroads X Sandbridge Commons X Broad Creek Shopping Center X Socastee Commons X Brooks Crossing (Retail) X South Retail X Broadmoor Plaza X South Square X Columbus Village X Southgate Square X Columbus Village II X Southshore Shops X Commerce Street Retail X Stone House Square X Courthouse 7-Eleven X Studio 56 Retail X Dick’s at Town Center X Tyre Neck Harris Teeter X Dimmock Square X Waynesboro Commons X Greentree Shopping Center X Wendover Village X Fountain Plaza Retail X Wendover Village Outparcel X Gainsborough Square X Office Properties Hanbury Village X 4525 Main Street X Harper Hill Commons X Armada Hoffler Tower X Harrisonburg Regal X Commonwealth of VA - Chesapeake X Indian Lakes X Commonwealth of VA - Virginia Beach X Lightfoot Marketplace X One Columbus X North Hampton Market X Two Columbus X North Point Center X Multifamily Properties Oakland Marketplace X Encore Apartments X Parkway Centre X Liberty Apartments X Parkway Marketplace X Smith’s Landing X Patterson Place X The Cosmopolitan X Perry Hall Marketplace X Johns Hopkins Village X Three Months Ended 3/31/2018 to 2017 Three Months Ended 3/31/2018 to 2017


 
33Reconciliation to Property Portfolio NOI $ in thousands (1) See page 32 for the Same Store vs. Non-Same Store properties (2) Includes expenses associated with the companies in house asset management division. Three months ended 3/31 2018 2017 Office Same Store(1) Rental revenues $3,454 $3,514 Property expenses 1,345 1,232 NOI 2,109 2,282 Non-Same Store NOI (2) 1,043 849 Segment NOI $3,152 $3,131 Retail Same Store(1) Rental revenues $15,424 $15,222 Property expenses 3,807 3,579 NOI 11,617 11,643 Non-Same Store NOI (2) 754 18 Segment NOI $12,371 $11,661 Multifamily Same Store(1) Rental revenues $2,854 $2,837 Property expenses 1,157 1,151 NOI 1,697 1,686 Non-Same Store NOI (2) 2,242 2,177 Segment NOI $3,939 $3,863 Total Property Portfolio NOI $19,462 $18,655


 
34Reconciliation to Property Portfolio NOI $ in thousands Three months ended 3/31/2018 Diversified Portfolio Office Retail Multifamily Total NOI - Cash Basis $0 $9,831 $2,274 $12,105 Net effect of straight-line rents - 3 78 81 Amortization of lease incentives and (above) below market rents - 177 - 177 NOI $0 $10,011 $2,352 $12,363 Town Center of Virginia Beach Office Retail Multifamily Total NOI - Cash Basis $3,065 $2,171 $1,584 $6,820 Net effect of straight-line rents 381 (59) 3 325 Amortization of lease incentives and (above) below market rents (70) (50) - (120) El minati n of AHH rent (224) (98) - (322) NOI $3,152 $1,964 $1,587 $6,703 NOI Office Retail Multifamily Total Diversified Portfolio $0 $10,011 $2,352 $12,363 Town Center of Virginia Beach 3,152 1,964 1,587 6,703 Unstabilized Properties - 396 - 396 Total Property Portfolio NOI $3,152 $12,371 $3,939 $19,462


 
35Reconciliation to GAAP Net Income $ in thousands Office Retail Multifamily Total Rental Properties General Contracting & Real Estate Services Total Segment revenues 5,100$ 16,711$ 6,888$ 28,699$ 23,050$ 51,749$ Segment expenses 1,948 4,340 2,949 9,237 22,414 31,651 Net operating income 3,152$ 12,371$ 3,939$ 19,462$ 636$ 20,098$ Depreciation and amortization (9,278) General and administrative expenses (2,961) Acquisition, development and other pursuit costs (84) Interest income 2,232 Interest expense (4,373) Change in fair value of interest rate derivatives 969 Other income (loss) benefit 114 Income tax benefit (provision) 266 Net income 6,983$ Three months ended 3/31/2018


 
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