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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 2, 2019
 
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))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.01 par value per share
 
AHH
 
New York Stock Exchange




Item 2.02.     Results of Operations and Financial Condition.
 
On May 2, 2019, Armada Hoffler Properties, Inc. (the “Company”) issued a press release announcing its financial position as of March 31, 2019, results of operations for the three months ended March 31, 2019 and other related information. Also on May 2, 2019, 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, 2019. 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 2, 2019
/s/ Michael P. O’Hara
 
Michael P. O’Hara
 
Chief Financial Officer, Treasurer and Secretary


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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1


397768294_ahpropertieslogofullca15.jpg
 
PRESS RELEASE
 
ARMADA HOFFLER PROPERTIES REPORTS FIRST QUARTER 2019 RESULTS

Net Income of $0.10 Per Diluted Share
 
Normalized FFO of $0.27 Per Diluted Share

Reaffirmed 2019 Full-Year Normalized FFO Guidance
 
VIRGINIA BEACH, VA, May 2, 2019 – Armada Hoffler Properties, Inc. (NYSE:AHH) today announced its results for the quarter ended March 31, 2019 and provided an update on current events.
 
Highlights include:

Net income of $6.5 million, or $0.10 per diluted share, for the quarter ended March 31, 2019 compared to net income of $7.0 million, or $0.11 per diluted share, for the quarter ended March 31, 2018.
 
Normalized Funds From Operations (“FFO”) of $18.5 million, or $0.27 per diluted share, for the quarter ended March 31, 2019 compared to Normalized FFO of $15.4 million, or $0.25 per diluted share, for the quarter ended March 31, 2018.

FFO of $16.6 million, or $0.25 per diluted share, for the quarter ended March 31, 2019 compared to FFO of $16.3 million, or $0.26 per diluted share, for the quarter ended March 31, 2018.
 
The Company reaffirmed 2019 full-year Normalized FFO guidance of $1.11 to $1.17 per diluted share.

Core operating property portfolio occupancy at 96.0% as of March 31, 2019 compared to 95.8% as of December 31, 2018.

Same Store Net Operating Income (“NOI”) for the quarter ended March 31, 2019 increased 2.6% on a GAAP basis and 2.4% on a cash basis compared to the quarter ended March 31, 2018. Multifamily Same Store NOI for the quarter ended March 31, 2019 increased 9.0% on a GAAP basis and 8.0% on a cash basis compared to the quarter ended March 31, 2018.

Positive releasing spreads on office renewals during the first quarter of 17.0% on a GAAP basis and 2.5% on a cash basis. Positive releasing spreads on retail renewals during the first quarter of 5.5% on a GAAP basis and 3.4% on a cash basis.

Increased the first quarter 2019 cash dividend by 5% over the prior quarter's cash dividend to $0.21 per common share. This marks the fifth increase in five years and represents cumulative growth of over 31%.

Completed the acquisition and refinancing of the commercial office and retail components of our One City Center development project in downtown Durham, North Carolina from the joint venture partnership.

Exercised our at-cost purchase option to acquire a 79% controlling interest in 1405 Point, the 17-story luxury high-rise apartment building located in the Harbor Point area of the Baltimore waterfront, in exchange for the Company's mezzanine loan investment and the assumption of existing debt.


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Agreed to acquire Red Mill Commons and Marketplace at Hilltop in exchange for 4.1 million Operating Partnership units each valued at $15.55 per unit, the assumption of $36 million of debt, and $5 million in cash for aggregate consideration of $105 million.

Raised $30.6 million of gross proceeds through our at-the-market equity offering program at an average price of $14.78 per share during the quarter ended March 31, 2019.

"We are extremely optimistic about the company’s prospects for the rest of 2019 as well as our ability to deliver on our promises over a multi-year timeframe," said Louis Haddad, President & CEO." As the company’s largest equity holder, management will continue to operate a business model that includes a variety of deal structures, OP unit acquisitions, and disposition of development projects, at cost options, and stable assets. As we look toward 2020 and the number of projects we intend to deliver and stabilize at that time, we feel strongly that our investors will continue to realize great value creation well into the future."

Financial Results
 
Net income for the first quarter decreased to $6.5 million compared to $7.0 million for the first quarter of 2018. The period-over-period change was primarily due to a $2.4 million swing in the change in fair value of interest rate derivatives and a $1.5 million increase in interest expense. This was partially offset by a $3.1 million increase in interest income and an increase in property net operating income due to 2018 and 2019 property acquisitions and certain development projects coming online.

Normalized FFO for the first quarter increased to $18.5 million compared to $15.4 million for the first quarter of 2018. FFO for the first quarter increased to $16.6 million compared to $16.3 million for the first quarter of 2018. The period-over-period changes in Normalized FFO and FFO were positively impacted by property acquisitions, completion of development projects, and higher interest income. These increases in Normalized FFO and FFO were partially offset by increased interest expense.
 
Operating Performance
 
At the end of the first quarter, the Company’s office, retail and multifamily core operating property portfolios were 94.9%, 96.1% and 97.2% occupied, respectively.
 
Total construction contract backlog was $160.9 million at the end of the first quarter.

Balance Sheet and Financing Activity
 
As of March 31, 2019, the Company had $744.1 million of total debt outstanding, including $91.0 million outstanding under its revolving credit facility. Total debt outstanding excludes unamortized GAAP fair value adjustments and deferred financing costs. Approximately 56.8% of the Company’s debt had fixed interest rates or was subject to interest rate swaps as of March 31, 2019. After considering LIBOR interest rate caps with strike prices at or below 250 basis points as of March 31, 2019, 97.1% of the Company’s debt was either fixed or hedged.

There is no debt maturing during the remainder of 2019.

Outlook
 
The Company is reaffirming its 2019 full-year Normalized FFO guidance range of $1.11 to $1.17 per diluted share. The following table updates the Company's assumptions underpinning this forecast. The Company's executive management will provide further details regarding its 2019 earnings guidance during today's webcast and conference call.


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Full-year 2019 Guidance [1]
 
Expected Ranges
Total NOI
 
$96.9M

 
$97.7M

Construction Segment Gross Profit
 
$4.9M

 
$5.7M

G&A Expenses
 
$11.0M

 
$11.5M

Mezzanine Interest Income (Net of Interest Expense) [2] [3]
 
$15.2M

 
$15.7M

Interest Expense (Net of Mezzanine Interest Expense) [3]
 
$24.7M

 
$25.7M

Normalized FFO per diluted share [4]
 

$1.11

 

$1.17


[1] Includes the following assumptions:
Acquired 79% partnership interest of 1405 Point apartments on April 25th, 2019.
Sale of Lightfoot Marketplace, a Harris Teeter grocery-anchored shopping center with expected proceeds of approximately $25 million in the third quarter of 2019.
Acquisition of Red Mill Commons and Marketplace at Hilltop for $105 million in the second quarter of 2019. Total consideration composed of 4.1 million Operating Partnership units each valued at $15.55, assumed mortgage debt of $36 million, and $5 million in cash. The transaction is expected to add $8.1 million of annual net operating income.
Interest expense is calculated based on the Forward LIBOR Curve, which forecasts rates ending the year at 2.36%.
Opportunistic sale of approximately $50 million through the ATM program, for a full year weighted average share count of 72.3 million.

[2] Includes $4.5 million of Annapolis Junction purchase option proceeds.

[3] Includes $5.4 million of interest expense associated with funding the Company's mezzanine program.

[4] Normalized FFO excludes certain items, including debt extinguishment losses, acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives, severance related costs, and other non-comparable items. See "Non-GAAP Financial Measures." The Company does not provide a reconciliation for its guidance range of Normalized FFO per diluted share to net income per diluted share, the most directly comparable forward-looking GAAP financial measure, because it is unable to provide a meaningful or accurate estimate of reconciling items and the information is not available without unreasonable effort as a result of the inherent difficulty of forecasting the timing and/or amounts of various items that would impact net income per diluted share. For the same reasons, the Company is unable to address the probable significance of the unavailable information and believes that providing a reconciliation for its guidance range of Normalized FFO per diluted share would imply a degree of precision for its forward-looking net income per diluted share that could be misleading to investors.

Supplemental Financial Information
 
Further details regarding operating results, properties and leasing statistics can be found in the Company’s supplemental financial package available at www.ArmadaHoffler.com.
 
Webcast and Conference Call
 
The Company will host a webcast and conference call on Thursday, May 2, 2019 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 Sunday, June 2, 2019 by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the pass code 13688835.
 
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

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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, 2018, 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 depreciation and amortization related to real estate, gains or losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.
 
FFO is a supplemental non-GAAP financial measure. The Company uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring the Company’s operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared period-over-period, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare the Company’s operating performance with that of other REITs.
 
However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the Company’s properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the Company’s properties, all of which have real economic effects and could materially impact the Company’s results from operations, the utility of FFO as a measure of the Company’s performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the Nareit definition as the Company does, and, accordingly, the Company’s FFO may not be comparable to such other REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of the Company’s performance.
 
Management also believes that the computation of FFO in accordance with Nareit’s definition includes certain items that are not indicative of the results provided by the Company’s operating property portfolio and affect the comparability of the Company’s period-over-period performance. Accordingly, management believes that Normalized FFO is a more useful performance measure that excludes certain items, including but not limited to, acquisition, development and other pursuit costs, gains or losses from the early extinguishment of debt, impairment of intangible assets and liabilities, mark-to-market adjustments for interest rate derivatives, severance related costs, and other non-comparable items.
 
For reference, as an aid in understanding the Company’s computation of FFO and Normalized FFO, a reconciliation of net income calculated in accordance with GAAP to FFO and Normalized FFO has been included in the final page of this release.
 

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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
 
 
 
March 31, 2019
 
December 31, 2018
 
 
(Unaudited)
 
 
ASSETS
 
 
 
 
Real estate investments:
 
 
 
 
Income producing property
 
$
1,102,803

 
$
1,037,917

Held for development
 
2,994

 
2,994

Construction in progress
 
145,366

 
135,675

 
 
1,251,163

 
1,176,586

Accumulated depreciation
 
(196,518
)
 
(188,775
)
Net real estate investments
 
1,054,645

 
987,811

Real estate investments held for sale
 
929

 
929

Cash and cash equivalents
 
15,577

 
21,254

Restricted cash
 
3,382

 
2,797

Accounts receivable, net
 
18,297

 
19,016

Notes receivable
 
152,172

 
138,683

Construction receivables, including retentions
 
17,784

 
16,154

Construction contract costs and estimated earnings in excess of billings
 
317

 
1,358

Equity method investments
 

 
22,203

Lease right-of-use assets
 
32,242

 

Other assets
 
63,909

 
55,177

Total Assets
 
$
1,359,254

 
$
1,265,382

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Indebtedness, net
 
$
737,621

 
$
694,239

Accounts payable and accrued liabilities
 
15,904

 
15,217

Construction payables, including retentions
 
42,293

 
50,796

Billings in excess of construction contract costs and estimated earnings
 
3,622

 
3,037

Lease liabilities
 
41,697

 

Other liabilities
 
40,431

 
46,203

Total Liabilities
 
881,568

 
809,492

Total Equity
 
477,686

 
455,890

Total Liabilities and Equity
 
$
1,359,254

 
$
1,265,382

 


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ARMADA HOFFLER PROPERTIES, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)

 
 
Three Months Ended March 31,
 
 
2019
 
2018
 
 
(Unaudited)
Revenues
 
 
 
 
Rental revenues
 
$
30,909

 
$
28,699

General contracting and real estate services revenues
 
17,036

 
23,050

Total revenues
 
47,945

 
51,749

Expenses
 
 
 
 
Rental expenses
 
6,725

 
6,424

Real estate taxes
 
3,128

 
2,813

General contracting and real estate services expenses
 
16,286

 
22,414

Depreciation and amortization
 
9,904

 
9,278

General and administrative expenses
 
3,401

 
2,961

Acquisition, development and other pursuit costs
 
400

 
84

Total expenses
 
39,844

 
43,974

Operating income
 
8,101

 
7,775

Interest income
 
5,319

 
2,232

Interest expense
 
(5,886
)
 
(4,373
)
Equity in income of unconsolidated real estate entities
 
273

 

Change in fair value of interest rate derivatives
 
(1,463
)
 
969

Other income
 
60

 
114

Income before taxes
 
6,404

 
6,717

Income tax benefit
 
110

 
266

Net income
 
6,514

 
6,983

Net income attributable to noncontrolling interests
 
(1,630
)
 
(1,943
)
Net income attributable to stockholders
 
$
4,884

 
$
5,040

Net income per diluted share and unit
 
$
0.10

 
$
0.11

Weighted average shares and units outstanding
 
67,919

 
62,538

  

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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,
 
 
2019
 
2018
 
 
(Unaudited)
Net income
 
$
6,514

 
$
6,983

Depreciation and amortization (1)
 
10,129

 
9,278

Funds From Operations (FFO)
 
$
16,643

 
$
16,261

Acquisition, development and other pursuit costs
 
400

 
84

Change in fair value of interest rate derivatives
 
1,463

 
(969
)
Normalized FFO
 
$
18,506

 
$
15,376

Net income per diluted share and unit
 
$
0.10

 
$
0.11

FFO per diluted share and unit
 
$
0.25

 
$
0.26

Normalized FFO per diluted share and unit
 
$
0.27

 
$
0.25

Weighted average common shares and units - diluted
 
67,919

 
62,538


(1) The adjustment for depreciation and amortization includes depreciation attributable to the Company's investment in One City Center from January 1, 2019 to March 14, 2019, which was an unconsolidated real estate investment during this period.

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



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Section 3: EX-99.2 (EXHIBIT 99.2)

ahh2019supplemental
1Q 2019 SUPPLEMENTAL FINANCIAL PACKAGE


 
Table of Contents 2 Forward Looking Statements 03 Corporate Profile 04 Highlights 05 2019 Outlook & Assumptions 06 Summary Information 07 Net Asset Value Component Data 08 Summary Balance Sheet 09 Summary Income Statement 10 FFO, Normalized FFO & Adjusted FFO 11 Outstanding Debt 12 Debt Information 13 Core Debt to Core EBITDA 14 Capitalization & Financial Ratios 15 Property Portfolio 16 Development & Redevelopment Pipeline 18 Mezzanine Investments 19 Acquisitions & Dispositions 20 Construction Business Summary 21 Same Store NOI by Segment 22 Top 10 Tenants by Annualized Base Rent 23 Office Lease Summary 24 Office Lease Expirations 25 Retail Lease Summary 26 Retail Lease Expirations 27 Appendix – Definitions & Reconciliations 29 Same Store vs Non-Same Store Properties 32 Reconciliation to Property Portfolio NOI 33 Reconciliation to GAAP Net Income 35


 
3 F O R W A R D L O O K I N G S T A T E M E N T S Armada Hoffler This Supplemental Financial Package should be read in conjunction with the unaudited condensed consolidated financial statements appearing in our press release dated May 2, 2019, which has been furnished as Exhibit 99.1 to our Form 8-K filed on May 2, 2019. 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, mezzanine loan program, 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.


 
Corporate Profile 4 Armada Hoffler Properties, Inc. (NYSE: AHH) is a vertically-integrated, self-managed real estate investment trust (“REIT”) with four decades of experience developing, building, acquiring, and managing high-quality, institutional-grade office, retail, and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. In addition to developing and building properties for its own account, the Company also provides development and general contracting construction services to third-party clients. Founded in 1979 by Daniel A. Hoffler, the Company has elected to be taxed as a REIT for U.S. federal income tax purposes. BOARD OF DIRECTORS Daniel A. Hoffler, Executive Chairman of the Board George F. Allen, Independent Director A. Russell Kirk, Vice Chairman of the Board James A. Carroll, Independent Director Louis S. Haddad, Director James C. Cherry, Independent Director John W. Snow, Lead Independent Director Eva S. Hardy, Independent Director Corporate Officers Investor Relations Louis S. Haddad, President and Chief Executive Officer Michael P. O’Hara, Chief Financial Officer Michael P. O’Hara, Chief Financial Officer 757-366-6684 Eric E. Apperson, President of Construction mohara@armadahoffler.com Shelly R. Hampton, President of Asset Management Analyst Coverage Bank of America Merrill Lynch Janney, Montgomery, & Scott LLC Raymond James & Associates Stifel, Nicolaus & Company Inc. James Feldman Robert Stevenson Bill Crow John Guinee (646) 855-5808 (646) 840-3217 (727) 567-2594 (443) 224-1307 james.feldman@baml.com robertstevenson@janney.com bill.crow@raymondjames.com jwguinee@stifel.com D. A. Davidson & Co. B. Riley FBR Robert W. Baird & Co. James Lykins Craig Kucera David Rodgers (503) 603-3041 (540) 277-3366 (216) 737-7341 jlykins@dadco.com craigkucera@brileyfbr.com drodgers@rwbaird.com


 
Highlights 5 • Net income of $6.5 million, or $0.10 per diluted share, for the quarter ended March 31, 2019 compared to net income of $7.0 million, or $0.11 per diluted share, for the quarter ended March 31, 2018. • Normalized Funds From Operations (“FFO”) of $18.5 million, or $0.27 per diluted share, for the quarter ended March 31, 2019 compared to Normalized FFO of $15.4 million, or $0.25 per diluted share, for the quarter ended March 31, 2018. • FFO of $16.6 million, or $0.25 per diluted share, for the quarter ended March 31, 2019 compared to FFO of $16.3 million, or $0.26 per diluted share, for the quarter ended March 31, 2018. • The Company reaffirmed 2019 full-year Normalized FFO guidance of $1.11 to $1.17 per diluted share. • Core operating property portfolio occupancy at 96.0% as of March 31, 2019 compared to 95.8% as of December 31, 2018. • Same Store Net Operating Income (“NOI”) for the quarter ended March 31, 2019 increased 2.6% on a GAAP basis and 2.4% on a cash basis compared to the quarter ended March 31, 2018. Multifamily Same Store NOI for the quarter ended March 31, 2019 increased 9.0% on a GAAP basis and 8.0% on a cash basis compared to the quarter ended March 31, 2018. • Positive releasing spreads on office renewals during the first quarter of 17.0% on a GAAP basis and 2.5% on a cash basis. Positive releasing spreads on retail renewals during the first quarter of 5.5% on a GAAP basis and 3.4% on a cash basis. • Increased the first quarter 2019 cash dividend by 5% over the prior quarter's cash dividend to $0.21 per common share. This marks the fifth increase in five years and represents cumulative growth of over 31% since inception. • Completed the acquisition and refinancing of the commercial office and retail components of our One City Center development project in downtown Durham, North Carolina from the joint venture partnership. • Exercised our at-cost purchase option to acquire a 79% controlling interest in 1405 Point, the 17-story luxury high-rise apartment building located in the Harbor Point area of the Baltimore waterfront, in exchange for the Company's mezzanine loan investment and the assumption of existing debt. • Agreed to acquire Red Mill Commons and Marketplace at Hilltop in exchange for 4.1 million Operating Partnership units each valued at $15.55 per unit, the assumption of $36 million of debt, and $5 million in cash for aggregate consideration of $105 million. • Raised $30.6 million of gross proceeds through our at-the-market equity offering program at an average price of $14.78 per share during the quarter ended March 31, 2019.


 
2019 Outlook & Assumptions 6 Outlook Low High Total NOI $96.9M $97.7M Construction Segment Gross Profit $4.9M $5.7M G&A expenses $11.0M $11.5M Mezzanine Interest Income (Net of Interest Expense)(1)(2) $15.2M $15.7M Interest Expense (Net of Mezzanine Interest Expense)(2) $24.7M $25.7M Normalized FFO per diluted share $1.11 $1.17 (1) Includes $4.5M of Annapolis Junction purchase option proceeds. (2) Includes $5.4M of interest expense associated with funding the Company’s mezzanine program. GUIDANCE ASSUMPTIONS • Acquired 79% interest of the partnership in 1405 Point apartments on April 25th, 2019. • Sale of Lightfoot Marketplace a Harris Teeter grocery-anchored shopping center with expected proceeds of approximately $25M in the third quarter of 2019. • Acquisition of Red Mill Commons and Marketplace at Hilltop for $105 million in the second quarter of 2019. Transaction composed of 4.1 million Operating Partnership units each valued at $15.55, assumed mortgage debt of $36 million, and $5 million in cash. The transaction is expected to add $8.1 million of annual net operating income. • Interest expense is calculated based on Forward LIBOR Curve, which forecasts rates ending the year at 2.36%. • Opportunistic sale of approximately $50 million through the ATM program, for a full year weighted average share count of 72.3 million.


 
Summary Information 7 $ in thousands, except per share data Three months ended 3/31/2019 12/31/2018 9/30/2018 6/30/2018 3/31/2018 OPERATIONAL METRICS Net income $6,514 $4,895 $5,669 $5,945 $6,983 Net income per diluted share $0.10 $0.07 $0.09 $0.09 $0.11 Rental properties Net Operating Income (NOI) 21,056 20,563 18,987 19,341 19,462 General contracting and real estate services gross profit 750 551 977 567 636 Adjusted EBITDA(1)(2) 24,038 25,110 20,124 19,466 19,399 Funds From Operations (FFO) 16,643 17,089 15,865 15,124 16,261 FFO per diluted share $0.25 $0.26 $0.24 $0.24 $0.26 Normalized FFO 18,506 20,190 15,650 15,242 15,376 Normalized FFO per diluted share $0.27 $0.30 $0.24 $0.24 $0.25 Annualized dividend yield 5.39% 5.69% 5.29% 5.37% 5.84% CAPITALIZATION Total common shares outstanding 52,327 50,014 49,576 48,768 45,205 Operating Partnership units outstanding 16,992 17,110 17,167 17,291 17,441 Common shares and OP units outstanding 69,319 67,124 66,743 66,059 62,646 Market price per common share $15.59 $14.06 $15.11 $14.90 $13.69 Equity market capitalization(3) $1,080,683 $943,763 $1,008,487 $984,279 $857,624 Total debt(4) 744,123 700,722 660,608 586,821 595,637 Total market capitalization 1,824,806 1,644,485 1,669,095 1,571,100 1,453,261 Less: cash (18,959) (24,051) (20,648) (15,418) (19,306) Total enterprise value $1,805,847 $1,620,434 $1,648,447 $1,555,682 $1,433,955 BALANCE SHEET METRICS Core Debt/enterprise value 32.5% 36.7% 34.9% 34.1% 38.4% Fixed charge coverage ratio 3.3x 3.7x 3.5x 3.5x 3.6x Core Debt/Annualized Core EBITDA 6.3x 6.6x 7.1x 6.8x 7.0x CORE PORTFOLIO OCCUPANCY Office(5) 94.9% 93.3% 93.8% 93.7% 92.2% Retail(5) 96.1% 96.2% 96.6% 96.7% 96.7% Multifamily(6) 97.2% 97.3% 97.1% 89.2% (7) 96.1% Weighted Average(8) 96.0% 95.8% 96.1% 94.8% 95.6% (1) Excludes gains on dispositions of real estate and mark-to-market adjustments on interest rate derivatives. (2) Includes gain on non-operating real estate of $3.4M and approximately $688K of severance for the three months ended 12/31/18. (3) Includes common shares and OP units. (4) Excludes unamortized GAAP adjustments. (5) Office and retail occupancy based on leased square feet as a % of respective total. (6) Multifamily occupancy based on occupied units as a % of respective total. (7) Includes impact of seasonality, attributed to the reduced summer occupancy at the JHU student housing property. (8) Total occupancy weighted by annualized base rent.


 
Net Asset Value Component Data 8 In thousands Stabilized Portfolio NOI (Cash)(1) General Contracting and Real Estate Services Three months ended Annualized Trailing 12 Months 3/31/2019 3/31/2019 General Contracting Gross Profit(4) $6,261 Stabilized Virginia Beach (VB) Town Center(1) Office(2) $3,287 $13,148 Retail(2) 2,125 8,500 Non-Property Assets(5) Multifamily 1,661 6,644 As of 3/31/2019 Total Stabilized VB Town Center NOI $7,073 $28,292 Cash and Cash Equivalents $15,577 Restricted cash 3,382 Stabilized Portfolio (Excludes VB Town Center)(1) Accounts Receivable 18,297 Office $0 $0 Notes Receivable, Including Mezzanine Investments (6) 151,054 Retail 10,338 41,352 Construction Receivables, Including Retentions 17,784 Multifamily 2,560 10,240 Other Assets 63,909 Total Stabilized Portfolio (Excludes VB Town Center) $12,898 $51,592 Land Held for Development (Book Value) 2,994 Total Non-Property Assets $272,997 Combined Stabilized Portfolio NOI $19,971 $79,884 (1) Run Rate Adjustments Liabilities(5) Signed Leases Not Yet Occupied or In Free Rent Period $1,675 $6,702 As of 3/31/2019 Net Acquisitions/Dispositions Completed Intra-Quarter 198 792 Mortgages and Notes Payable(6) $744,123 Total Run Rate Adjustments $1,873 $7,494 Accounts Payable and Accrued Liabilities 15,904 Construction Payables, Including Retentions 42,293 Total $21,844 $87,378 Other Liabilities 44,053 Total Liabilities $846,373 Non-Stabilized Portfolio and Development Pipeline (Cost Basis)(3) As of 3/31/2019 Share Count Income Producing Properties $108,000 As of 3/31/2019 Construction In Process 140,000 Total common shares outstanding 52,327 Other Assets 3,000 Total OP units outstanding 16,992 Total Non-Stabilized Portfolio $251,000 Total common shares & OP units outstanding 69,319 (1) NOI from non-stabilized portfolio and development pipeline excluded from stabilized portfolio. (2) Includes leases for space occupied by Armada Hoffler which are eliminated for GAAP purposes. (3) NOI not included in Stabilized. (4) Includes $3.4 million from the sale of a distribution center. (5) Lease right of use assets and lease liabilities excluded. (6) Excludes unamortized GAAP adjustments.


 
Summary Balance Sheet 9 $ in thousands As of 3/31/2019 12/31/2018 Assets (Unaudited) Real estate investments: Income producing property $1,102,803 $1,037,917 Held for development 2,994 2,994 Construction in progress 145,366 135,675 Accumulated depreciation (196,518) (188,775) Net real estate investments 1,054,645 987,811 Real estate investments held for sale 929 929 Cash and cash equivalents 15,577 21,254 Restricted cash 3,382 2,797 Accounts receivable, net 18,297 19,016 Notes receivable 152,172 138,683 Construction receivables, including retentions 17,784 16,154 Costs and estimated earnings in excess of billings 317 1,358 Equity method investments - 22,203 Lease right of use assets 32,242 - Other assets 63,909 55,177 Total Assets $1,359,254 $1,265,382 Liabilities and Equity Indebtedness, net $737,621 $694,239 Accounts payable and accrued liabilities 15,904 15,217 Construction payables, including retentions 42,293 50,796 Billings in excess of costs and estimated earnings 3,622 3,037 Lease liabilities 41,697 - Other liabilities 40,431 46,203 Total Liabilities 881,568 809,492 Total Equity 477,686 455,890 Total Liabilities and Equity $1,359,254 $1,265,382


 
Summary Income Statement 10 In thousands, except per share data Three months ended 3/31/2019 3/31/2018 Revenues (Unaudited) Rental revenues $30,909 $28,699 General contracting and real estate services 17,036 23,050 Total Revenues 47,945 51,749 Expenses Rental expenses 6,725 6,424 Real estate taxes 3,128 2,813 General contracting and real estate services 16,286 22,414 Depreciation and amortization 9,904 9,278 General and administrative 3,401 2,961 Acquisition, development & other pursuit costs 400 84 Total Expenses 39,844 43,974 Operating Income 8,101 7,775 Interest income 5,319 2,232 Interest expense (5,886) (4,373) Equity in income of unconsolidated real estate entities 273 - Change in fair value of interest rate derivatives (1,463) 969 Other income 60 114 Income before taxes 6,404 6,717 Income tax benefit 110 266 Net Income $6,514 $6,983 Per Diluted Share & Unit $0.10 $0.11 Weighted Average Shares & Units - Diluted 67,919 62,538


 
FFO, Normalized FFO & AFFO(1) 11 $ in thousands, except per share data Three months ended (Unaudited) 3/31/2019 12/31/2018 9/30/2018 6/30/2018 3/31/2018 Funds From Operations Net income $6,514 $4,895 $5,669 $5,945 $6,983 Earnings per diluted share $0.10 $0.07 $0.09 $0.09 $0.11 Depreciation and amortization(2) 10,129 11,525 10,196 9,179 9,278 Gains on dispositions of operating real estate(3) - (833) - - - Impairment of real estate assets (4) - 1,502 - - - FFO $16,643 $17,089 $15,865 $15,124 $16,261 FFO per diluted share $0.25 $0.26 $0.24 $0.24 $0.26 Normalized FFO Acquisition, development & other pursuit costs 400 190 69 9 84 Loss on extinguishment of debt - - 11 - - Impairment of intangible assets and liabilities - 16 3 98 - Severance related costs - 688 - - - Change in fair value of interest rate derivatives 1,463 2,207 (298) 11 (969) Normalized FFO $18,506 $20,190 $15,650 $15,242 $15,376 Normalized FFO per diluted share $0.27 $0.30 $0.24 $0.24 $0.25 Adjusted FFO Non-cash stock compensation 689 55 252 271 555 Acquisition, development & other pursuit costs (400) (190) (69) (9) (84) Tenant improvements, leasing commissions, lease incentives (5) (809) (2,447) (899) (1,102) (1,058) Property related capital expenditures (1,494) (2,961) (884) (1,098) (1,321) Adjustment for Annapolis Junction purchase option (1,118) 4,489 - - - Non-cash interest expense 304 289 270 231 326 Net effect of straight-line rents (840) (915) (709) (415) (478) Amortization of leasing incentives & above (below) market rents (10) (29) (43) (46) (56) AFFO $14,828 $18,481 $13,568 $13,074 $13,260 AFFO per diluted share $0.22 $0.28 $0.20 $0.21 $0.21 Weighted Average Common Shares Outstanding 50,926 49,726 49,194 45,928 45,132 Weighted Average Operating Partnership ("OP") Units Outstanding 16,993 17,110 17,168 17,286 17,406 Total Weighted Average Common Shares and OP Units Outstanding 67,919 66,836 66,362 63,214 62,538 (1) See definitions on pages 28-29. (2) The adjustment for depreciation and amortization includes fourth quarter 2018 and first quarter 2019 depreciation attributable to the Company’s investment in One City Center, which was an unconsolidated real estate investment until 3/14/19. (3) Excludes gain on non-operating real estate of $3.4M for the three months ended 12/31/18. (4) Disposition of Waynesboro Commons. (5) Excludes development, redevelopment, and first generation space.


 
Outstanding Debt 12 $ in thousands Debt Maturities & Principal Payments Effective Rate as Outstanding as of Debt Stated Rate of 3/31/2019 Maturity Date 2019 2020 2021 2022 2023 Thereafter 3/31/2019 Secured Notes Payable - Core Debt Southgate Square L+1.60% 4.09% 4/29/2021 $660 $880 $19,682 $21,222 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 377 522 544 17,449 18,892 Socastee Commons 4.57% 4.57% 1/6/2023 79 109 115 120 4,222 4,645 Sandbridge Commons L+1.75% 4.24% 1/17/2023 179 247 257 268 7,248 8,199 249 Central Park Retail L+1.60% 3.85% (1) 8/10/2023 164 230 245 260 16,093 16,992 South Retail L+1.60% 3.85% (1) 8/10/2023 72 101 107 114 7,066 7,460 Fountain Plaza Retail L+1.60% 3.85% (1) 8/10/2023 100 139 147 156 9,684 10,226 Lightfoot Marketplace L+1.75% 4.77% (2) 10/12/2023 17,900 17,900 Johns Hopkins Village L+1.25% 4.19% (3) 8/7/2025 677 941 988 1,031 1,075 47,765 52,477 North Point Center Note 2 7.25% 7.25% 9/15/2025 92 130 140 151 162 1,642 2,317 Lexington Square 4.50% 4.50% 9/1/2028 165 256 268 280 293 13,598 14,860 Smith's Landing 4.05% 4.05% 6/1/2035 620 856 892 928 966 14,521 18,783 Liberty Apartments 5.66% 5.66% 11/1/2043 205 288 304 332 341 12,900 14,370 The Cosmopolitan 3.35% 3.35% 7/1/2051 577 792 819 847 876 40,368 44,279 Total - Secured Core Debt $4,249 $6,641 $80,076 $21,936 $65,926 $130,794 $309,622 Secured Notes Payable - Development Pipeline Greenside Apartments L+2.95% 5.44% 2/24/2020 27,409 27,409 Premier L+2.75% 5.24% 6/29/2020 21,830 21,830 Summit Place L+3.24% 5.73% 1/1/2021 19,529 19,529 Hoffler Place L+3.24% 5.73% 1/1/2021 19,337 19,337 One City Center L+1.85% 4.34% 4/1/2024 339 574 628 659 691 22,734 25,625 Market at Mill Creek L+1.55% 4.04% 7/12/2025 13,549 13,549 Brooks Crossing Office L+1.60% 4.09% 7/1/2025 11,222 11,222 Total - Development Pipeline 339 49,813 39,494 659 691 47,505 138,501 Total Secured Notes Payable $4,588 $56,454 $119,570 $22,595 $66,617 $178,299 $448,123 Unsecured Core Debt Senior unsecured line of credit L+1.40% - 2.00% 4.04% 10/26/2021 91,000 91,000 Senior unsecured term loan L+1.35% - 1.95% 3.99% 10/26/2022 55,000 55,000 Senior unsecured term loan L+1.35% - 1.95% 3.50% - 4.28% (1)(3) 10/26/2022 150,000 150,000 Total - Unsecured Core Debt - - 91,000 205,000 - - 296,000 Total Notes Payable excluding GAAP Adjustments $4,588 $56,454 $210,570 $227,595 $66,617 $178,299 $744,123 GAAP Adjustments (6,502) Total Notes Payable $737,621 (1) Includes debt subject to interest rate swap locks, established 4/4/19. (2) Includes $10.5 of debt subject to interest rate swap locks. (3) Includes debt subject to interest rate swap locks.


 
Debt Information 13 $ in thousands Debt Maturities $250,000 6.0% 5.2% 5.0% $200,000 4.2% 4.2% 4.1% 4.0% 3.9% $150,000 3.0% $100,000 2.0% $50,000 1.0% $0 0.0% 2019 2020 2021 2022 2023 Thereafter Fixed-Rate Debt Variable-Rate Debt Weighted Average Interest Rate(1) Total Debt Composition Interest Rate Cap Agreements Weighted Average Notional % of Debt Interest Rate Maturity Effective Date Maturity Date Strike Rate Amount Secured vs. Unsecured Debt June-2017 CheckJuly-2019 1.50% $50,000 Unsecured Debt 39.8% 3.9% 3.3 Yrs September-2017 October-2019 1.50% 50,000 Secured Debt 60.2% 4.3% 7.8 Yrs November-2017 December-2019 1.50% 50,000 Variable vs. Fixed-rate Debt March-2018 April-2020 2.25% 50,000 Variable-rate Debt(2) 43.2% 4.5% 2.9 Yrs July-2018 August-2020 2.50% 50,000 Fixed-rate Debt(1)(3) 56.8% 3.9% 8.3 Yrs December-2018 January-2021 2.75% 50,000 Total Interest Rate Caps 300,000 Fixed-rate and Hedged Debt(1)(3) 97.1% Total 4.2% 6.0 Yrs Fixed-rate Debt(2)(3) 422,801 Fixed-rate and Hedged Debt 722,801 % of Total Debt(3) 97.1% (1) Includes debt subject to interest rate swap locks. (2) Excludes debt subject to interest rate swap locks. (3) Excludes GAAP adjustments.


 
Core Debt to Core EBITDA(1) 14 $ in thousands Three months ended 3/31/2019 12/31/2018 9/30/2018 6/30/2018 3/31/2018 Net Income $6,514 $4,895 $5,669 $5,945 $6,983 Excluding: Interest expense(2) 6,042 5,692 4,677 4,497 4,373 Income tax provision (benefit) (110) 523 (120) (166) (266) Depreciation and amortization(2) 10,129 11,525 10,196 9,179 9,278 (Gain) Loss on operating real estate dispositions - (833) - - - Impairment of real estate assets - 1,502 - - - Change in fair value of interest rate derivatives 1,463 2,207 (298) 11 (969) Adjusted EBITDA $24,038 $25,511 (3) $20,124 $19,466 $19,399 Other adjustments: Loss on extinguishment of debt - - 11 - - Non-cash stock compensation 689 55 252 271 555 Development Pipeline(2) (1,362) (1,129) (94) (106) (219) Total Other Adjustments (673) (1,074) 169 165 336 Core EBITDA $23,365 $24,437 $20,293 $19,631 $19,735 Total Debt(4) $744,123 $719,179 $660,608 $586,821 $595,637 Adjustments to Debt: (Less) Development Pipeline(4) (138,501) (100,268) (64,365) (40,232) (25,377) (Less) Cash & restricted cash (18,959) (24,051) (20,648) (15,418) (19,306) Core Debt $586,663 $594,860 $575,595 $531,171 $550,954 Core Debt/Annualized Core EBITDA 6.3x 6.6x 7.1x 6.8x 7.0x (1) See definitions on page 30. (2) The adjustment for depreciation and amortization as well as interest expense includes fourth quarter 2018 and first quarter 2019 activity attributable to the Company’s investment in One City Center, which was an unconsolidated real estate investment until 3/14/19. (3) Includes gain on non-operating real estate of $3.4M and approximately $688K of severance for the three months ended 12/31/18. These amounts are not annualized in the Core Debt/Annualized Core EBITDA calculation. (4) Excludes GAAP Adjustments.


 
Capitalization & Financial Ratios 15 $ in thousands Capitalization as of March 31, 2019 Capital Structure as of March 31, 2019 Debt % of Total Principal Balance Unsecured credit facility 12% $91,000 Unsecured term loans 28% 205,000 5% Mortgages payable 60% 448,123 15% 11% Total debt $744,123 Debt 41% 25% Equity % of Total Shares/Units Stock Price Market Value Equity Common stock (NYSE: AHH) 75% 52,327 $15.59 $815,778 59% 45% Common units 25% 16,992 $15.59 264,905 Equity market capitalization 69,319 $1,080,683 Total market capitalization $1,824,806 Debt/Market capitalization 41% Unsecured Credit Facility Unsecured Term Loans Mortgages Payable Liquidity as of March 31, 2019 Common Stock Cash on hand $18,959 Availability under credit facility 56,594 Unencumbered Properties as of March 31, 2019 Availability under construction loan 40,183 % of Total Properties 68% $115,736 % of Annualized Base Rent 51%


 
Property Portfolio 16 As of March 31, 2019 Net Rentable Square Feet (RSF)(1) Town Unencumbered Core Development Core Development ABR per Property Anchor Tenant(s) Location Center ABR Year Built Properties Properties Total Occupancy(2) Leased(2) ABR(3) Leased SF(3) Retail Properties Cheesecake Factory, Brooks Brothers, ✓ 249 Central Park Retail (4) Virginia Beach, VA - 2004 92,710 - 92,710 97.9% - $2,607,307 $28.73 Gordon Biersch Alexander Pointe Harris Teeter Salisbury, NC 100% 1997 57,710 - 57,710 95.1% - 636,150 11.59 Bermuda Crossroads (6) Food Lion, OfficeMax Chester, VA 100% 2001 122,566 - 122,566 98.4% - 1,717,090 14.24 Broad Creek Shopping Center(6)(9) Food Lion, PetSmart Norfolk, VA 100% 1997/2001 121,504 - 121,504 95.5% - 2,054,231 17.70 Broadmoor Plaza Kroger, Staples, Jo-Ann Fabrics South Bend, IN 100% 1980 115,059 - 115,059 97.5% - 1,376,691 12.27 Brooks Crossing Retail Various Small Shops Newport News, VA 100% 2016 - 18,349 18,349 - 66.3% 169,380 13.92 Columbus Village Barnes & Noble, Shake Shack Virginia Beach, VA ✓ 100% 1980/2013 62,362 - 62,362 100.0% - 1,535,823 24.63 Columbus Village II Regal Cinemas, BB&B Virginia Beach, VA ✓ 100% 1995/1996 92,061 - 92,061 96.7% - 1,595,334 17.92 ✓ Commerce Street Retail (5) Yard House Virginia Beach, VA 100% 2008 19,173 - 19,173 100.0% - 869,292 45.34 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% - 1,251,255 12.11 Dimmock Square Best Buy, Old Navy Colonial Heights, VA 100% 1998 106,166 - 106,166 97.2% - 1,769,587 17.15 Fountain Plaza Retail Ruth's Chris, Ann Taylor Virginia Beach, VA ✓ - 2004 35,961 - 35,961 100.0% - 1,026,320 28.54 Gainsborough Square Food Lion, Rite Aid Chesapeake, VA 100% 1999 88,862 - 88,862 91.1% - 1,240,570 15.32 Greentree Shopping Center Various Small Shops Chesapeake, VA 100% 2014 15,719 - 15,719 83.7% - 267,151 20.31 Hanbury Village(6) Harris Teeter, Walgreens Chesapeake, VA 32% 2006/2009 116,635 - 116,635 98.6% - 2,494,916 21.69 Harper Hill Commons (6) Harris Teeter Winston-Salem, NC 100% 2004 96,914 - 96,914 86.9% - 956,076 11.35 Harrisonburg Regal Regal Cinemas Harrisonburg, VA 100% 1999 49,000 - 49,000 100.0% - 683,550 13.95 Indian Lakes Crossing(6) Harris Teeter Virginia Beach, VA 100% 2008 64,973 - 64,973 95.0% - 842,432 13.65 Lexington Square Lowes Foods Lexington, SC - 2017 85,531 - 85,531 93.3% - 1,698,782 21.29 Lightfoot Marketplace(6) Harris Teeter, CHKD Williamsburg, VA - 2016 124,735 - 124,735 85.6% - 1,833,533 17.16 North Hampton Market PetSmart, Hobby Lobby Taylors, SC 100% 2004 114,935 - 114,935 100.0% - 1,473,083 12.82 Harris Teeter, PetSmart, Home Depot, North Point Center(6) Durham, NC 88% 1998/2009 494,746 - 494,746 100.0% - 3,821,387 7.72 Costco Oakland Marketplace(6) Kroger Oakland, TN 100% 2004 64,538 - 64,538 100.0% - 475,429 7.37 Parkway Centre Publix Moultrie, GA 100% 2017 61,200 - 61,200 98.0% - 810,360 13.51 Parkway Marketplace Rite Aid Virginia Beach, VA 100% 1998 37,804 - 37,804 94.4% - 717,906 20.11 Patterson Place BB&B, PetSmart, DSW, AC Moore Durham, NC 100% 2004 160,942 - 160,942 94.6% - 2,390,333 15.71 Perry Hall Marketplace Safeway Perry Hall, MD 100% 2001 74,256 - 74,256 100.0% - 1,261,436 16.99 Premier Retail Williams Sonoma, Pottery Barn Virginia Beach, VA ✓ - 2018 - 38,586 38,586 - 75.8% 957,730 32.76 Providence Plaza Cranfill, Sumner & Hartzog, Chipotle Charlotte, NC 100% 2007/2008 103,118 - 103,118 95.4% - 2,657,319 27.02 Renaissance Square Harris Teeter Davidson, NC 100% 2008 80,467 - 80,467 88.0% - 1,221,216 17.24 Sandbridge Commons(6) Harris Teeter Virginia Beach, VA - 2015 69,417 - 69,417 100.0% - 916,254 13.20 Socastee Commons Bi-Lo Myrtle Beach, SC - 2000/2014 57,273 - 57,273 96.7% - 631,087 11.40 Southgate Square Burlington, PetSmart, Michaels Colonial Heights, VA - 1991/2016 220,131 - 220,131 89.7% - 2,706,472 13.71 South Retail lululemon, free people, CPK Virginia Beach, VA ✓ - 2002 38,515 - 38,515 100.0% - 977,399 25.38 South Square(6) Ross, Petco, Office Depot Durham, NC 100% 1977/2005 109,590 - 109,590 95.3% - 1,793,427 17.16 Southshore Shops Buffalo Wild Wings Chesterfield, VA 100% 2006 40,333 - 40,333 88.8% - 747,695 20.88 Stone House Square(6) Weis Markets Hagerstown, MD 100% 2008 112,274 - 112,274 93.1% - 1,767,874 16.92 Studio 56 Retail McCormick & Schmick's Virginia Beach, VA ✓ 100% 2007 11,594 - 11,594 84.8% - 419,296 42.65 Tyre Neck Harris Teeter(9) Harris Teeter Portsmouth, VA 100% 2011 48,859 - 48,859 100.0% - 533,285 10.91 Wendover Village BB&B, T.J. Maxx, Petco Greensboro, NC 100% 2004 176,939 - 176,939 100.0% - 3,480,991 19.67 Total / Weighted Avg Retail Portfolio 73% 3,651,084 56,935 3,708,019 96.1% 72.7% $56,524,760 $15.92


 
Property Portfolio Cont. 17 As of March 31, 2019 Net Rentable Square Feet (RSF)(1) Town Unencumbered Core Development Core Development ABR per Leased Office Properties Anchor Tenant Location Center ABR Year Built Properties Properties Total Occupancy(2) Leased(2) ABR(3) SF(3) 4525 Main Street Clark Nexsen, Anthropologie, Mythics Virginia Beach, VA ✓ - 2014 234,938 - 234,938 98.1% - $6,597,818 $28.63 ✓ Armada Hoffler Tower(4)(5) AHH, Troutman Sanders, Williams Mullen Virginia Beach, VA 100% 2002 324,247 - 324,247 92.0% - 8,754,011 29.36 ✓ One Columbus(5) BB&T, HBA Virginia Beach, VA 100% 1984 128,876 - 128,876 92.2% - 2,948,523 24.80 One City Center Duke University, WeWork Durham, NC - 2019 - 153,666 153,666 - 84.7% 4,142,424 31.82 Two Columbus The Art Institute Virginia Beach, VA ✓ 100% 2009 108,459 - 108,459 100.0% - 2,845,964 26.24 Total / Weighted Average Office Portfolio 58% 796,520 153,666 950,186 94.9% 84.7% $25,288,741 $28.54 Units Development/ Development/ Town Unencumbered Core Redevelopment Core Redevelopment Monthly Rent per Multifamily Location Center ABR Year Built Properties Properties Total Occupancy (2) Occupancy(2) ABR (7) Occupied Unit Encore Apartments Virginia Beach, VA ✓ - 2014 286 - 286 94.4% - $4,238,652 $1,308.23 Greenside Apartments Charlotte, NC - 2018 - 225 225 - 58.2% 2,460,408 1,565.15 Johns Hopkins Village(8)(9)(10) Baltimore, MD - 2016 157 - 157 99.5% - 7,635,720 1,126.21 Liberty Apartments(8)(10) Newport News, VA - 2013 197 - 197 95.3% - 2,381,836 1,057.12 Premier Apartments Virginia Beach, VA ✓ - 2018 - 131 131 - 80.9% 1,804,680 1,418.77 Smith's Landing(9) Blacksburg, VA - 2009 284 - 284 100.0% - 4,070,568 1,194.42 The Cosmopolitan(8)(11) Virginia Beach, VA ✓ - 2006 - 300 300 - 93.0% (11) 5,350,027 1,597.98 Total / Weighted Avg Multifamily Portfolio - 924 656 1,580 97.2% 78.7% $27,941,891 $1,321.18 (1) The net rentable square footage for each of our retail & office properties is the sum of (a) the square Square Footage footage of existing leases, plus (b) for available space, management’s estimate of net rentable square Number of Leased Pursuant to Properties Subject to Ground Lease Ground Leases Ground Leases ABR footage based, in part, on past leases. The net rentable square footage included in office leases is Bermuda Crossroads 2 11,000 $179,685 generally consistent with the Building Owners and Managers Association, or BOMA, 1996 measurement Broad Creek Shopping Center 6 23,825 639,988 guidelines. Columbus Village 1 3,403 200,000 (2) Occupancy for each of our retail & office properties is calculated as (a) square footage under Hanbury Village 2 55,586 1,082,118 Harper Hill Commons 1 41,520 373,680 executed leases as of March 31, 2019, divided by (b) net rentable square feet, expressed as a Indian Lakes 1 50,311 592,385 percentage. Occupancy for our multifamily properties is calculated as (a) total units occupied as of Lightfoot Marketplace 3 60,442 660,375 March 31, 2019, divided by (b) total units available, as of such date expressed as a percentage. North Point Center 4 280,556 1,138,230 Oakland Marketplace 1 45,000 186,300 (3) For the properties in our office and retail portfolios, annualized base rent, or ABR, is calculated by Sandbridge Commons 1 53,288 583,000 multiplying (a) monthly base rent (defined as cash base rent, before contractual tenant concessions and South Square 1 1,778 60,000 abatements, and excluding tenant reimbursements for expenses paid by us) as of March 31, 2019 for in- Stone House Square 1 3,650 181,500 Tyre Neck Harris Teeter 1 48,859 533,285 place leases as of such date by (b) 12, and does not give effect to periodic contractual rent increases or Total / Weighted Avg 25 679,218 $6,410,546 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, 2019. In the case of triple net or modified gross leases, our calculation of ABR does not include tenant (7) For the properties in our multifamily portfolio, ABR is calculated by multiplying (a) base rental reimbursements for real estate taxes, insurance, common area or other operating expenses. payments for the month ended March 31, 2019 by (b) 12. (4) As of March 31, 2019, the Company occupied 43,034 square feet at these two properties at an ABR (8) The ABR for Liberty, Cosmopolitan, and Johns Hopkins Village excludes $293K, $875K and $1.2M of $1.4M, or $31.58 per leased square foot, which amounts are reflected in this table. The rent paid by from ground floor retail leases, respectively. us is eliminated in accordance with GAAP in the consolidated financial statements. (9) The Company leases the land underlying this property pursuant to a ground lease. (5) Includes ABR pursuant to a rooftop lease. (10) Monthly rent per occupied unit is calculated by dividing total base rental payments for the month (6) Net rentable square feet at certain of our retail properties includes pad sites leased pursuant to the ended March 31, 2019 by the number of occupied beds. ground leases in the table to the right: (11) Excludes 42 units offline for redevelopment for occupancy.


 
18 Development and Redevelopment Pipeline $ in thousands Schedule(1) Property % Leased Construction Initial Stabilized Estimated Loan Cost to AHH Projects Type Estimated(1) or LOI Start Occupancy Operation(2) Cost(1) Commitment Date Ownership % Anchor Tenants & Other Notes Under Development Brooks Crossing - Office Office 100,000 sf 100% 1Q18 2Q19 3Q19 $20,000 $15,625 $18,000 65%(3) Huntington Ingalls Industries Newport News, VA Hoffler Place (King Street) Multifamily 74 units 48% 3Q17 3Q19 3Q20 48,000 31,750 40,000 93% NA Charleston, SC Market at Mill Creek Retail 73,000 sf 93% 1Q18 1Q19 3Q19 23,000 16,185 22,000 70%(3) Lowes Foods Mt. Pleasant, SC Summit Place (Meeting Street) Multifamily 114 units - 3Q17 TBD TBD 53,000 34,750 42,500 90% NA Charleston, SC Wills Wharf Office 325,000 sf 68% 3Q18 1Q20 3Q20 119,000 - 32,000 100% WeWork, Canopy by Hilton Baltimore, MD Total Projects Under Development 243,000 82,685 136,500 Delivered Not Stabilized Brooks Crossing - Retail Retail 18,000 sf 66% 3Q15 3Q16 4Q19 3,000 - 3,000 65%(3) Misc. small shops Newport News, VA Greenside (Harding Place) Multifamily 225 Units 73% 3Q16 3Q18 4Q19 51,000 29,750 50,500 80%(3) NA Charlotte, NC One City Center Duke University, WeWork Office 153,000 sf 85% 1Q16 3Q18 2Q19 48,000 27,625 46,000 100% Durham, NC Premier Apartments (Town Center Phase VI) Multifamily 131 Units 92% 4Q16 2Q18 2Q19 30,000 16,666 30,000 100% NA Virginia Beach, VA Premier Retail (Town Center Phase VI) Retail 39,000 sf 76% 4Q16 3Q18 2Q20 15,000 8,334 12,500 100% Williams-Sonoma, Pottery Barn Virginia Beach, VA Total Projects Delivered Not Stabilized 653,000 263,370 433,000 Total $896,000 $346,055 $569,500 Property Units Out of Construction Anticipated Same-Store Estimated Loan Cost to Redevelopment Type Service % Leased Start Completion Sales Cost(1) Commitment Date The Cosmopolitan Multifamily 42 units 93% 1Q18 4Q20 4Q21 $10,000 NA $2,400 Virginia Beach, VA Q1 2019 Capitalized Interest $1,549 Capitalized Overhead $664 (1) Represents estimates that may change as the development process proceeds. (2) First fully-stabilized quarter. See same store definition on page 30. (3) AHH earns a preferred return on equity prior to any distributions to JV Partners.


 
Mezzanine Investments 19 $ in thousands Schedule(1) Principal Property % Leased Initial Mezzanine Mezzanine Option to Type Estimated(1) or LOI Occupancy Loan Maturity Interest Rate Financing Interest QTD Purchase Investments with Discounted Purchase Options 1405 Point (Point Street Apartments)(2) Multifamily 289 units 98% 1Q18 3Q21 8% $31,000 $610 $97,000 Baltimore, MD Nexton Square Retail 135,000 sf 70% 2Q19 4Q20 15% 14,000 509 42,000 Summerville, SC Short Term Investments The Residences at Annapolis Junction Multifamily 416 units 89% 3Q17 4Q19 10% 37,000 906 - Annapolis Junction, MD $5M Annapolis Junction Purchase Option sale - 1,118 - North Decatur Square (Whole Foods) Retail 86,000 sf 100% 4Q18 2Q22 15% 19,000 638 - Decatur, GA Delray Plaza (Whole Foods) Retail 83,000 sf 94% 3Q19 4Q20 15% 10,000 310 - Delray Beach, FL Solis Apartments at Interlock Multifamily 345 units NA 3Q20 3Q22 13% 15,000 463 - Atlanta, GA The Interlock Mixed-use 304,000 sf 63% 3Q20 3Q22 15% 24,000 743 - Atlanta, GA Total(3) $150,000 $5,297 Mezzanine Interest Expense(4) (1,321) Net Mezzanine Interest Income $3,976 (1) Represents estimates that may change as the development process proceeds. (2) Exercised purchase option subsequent to quarter end. (3) Excludes GAAP adjustments. (4) Includes $5.4M of interest expense associated with funding the Company’s mezzanine program.


 
Acquisitions & Dispositions 20 $ in thousands ACQUISITIONS Reinvested $ Value of Cash Cap Properties Location Square Feet Purchase Price(1) 1031 Proceeds OP Units/Stock(2) Rate Purchase Date Anchor Tenants Wendover Village III Greensboro, NC 5,286 $2,783 $2,424 - 9.2% 1Q19 Verizon Lexington Square(3) Lexington, SC 85,531 26,758 - $2,624 6.7% 3Q18 Lowes Foods Parkway Centre Moultrie, GA 61,200 11,200 - 1,624 6.4% 1Q18 Publix Indian Lakes Virginia Beach, VA 71,020 14,700 - - 7.1% 1Q18 Harris Teeter, Wawa Wendover Village Outparcel Greensboro, NC 35,895 14,300 7,900 - 7.7% 3Q17 Panera, Rooms to Go Kids Renaissance Square Davidson, NC 80,468 17,085 - - 7.1% 4Q16 Harris Teeter Columbus Village II Virginia Beach, VA 92,061 26,200 - 26,200 5.6% 4Q16 Regal, Bed Bath & Beyond Southshore Shops Midlothian, VA 40,333 9,160 - 2,475 7.8% 3Q16 Buffalo Wild Wings Southgate Square Colonial Heights, VA 220,131 38,585 - 17,485 7.3% 2Q16 PetSmart, Michael's, Burlington Retail Portfolio (11 properties) Mid-Atlantic 1,082,681 170,500 87,000 - 7.2% 1Q16 Harris Teeter, Bed Bath & Beyond Providence Plaza Charlotte, NC 103,118 26,200 14,000 - 7.3% 3Q15 Chipotle Socastee Commons Myrtle Beach, SC 57,573 8,600 3,600 - 7.3% 3Q15 BiLo Columbus Village Virginia Beach, VA 65,746 21,025 - 14,025 6.4% 3Q15 Barnes & Noble Perry Hall Marketplace & Maryland 182,949 39,555 15,200 4,155 7.4% 2Q15 Safeway & Weis Markets Stone House Square Dimmock Square Colonial Heights, VA 106,166 19,662 - 9,662 7.3% 3Q14 Old Navy, Best Buy, Pier 1 Total/Weighted Average 2,290,158 $446,313 $130,124 $78,250 7.1% DISPOSITIONS Square Cash Cap Properties Location Feet/Units Sale Price Cash Proceeds Gain on Sale Rate Disposition Date Anchor Tenants Indian Lakes Wawa Virginia Beach, VA 6,047 $4,400 $4,400 - 5.4% 2Q18 Wawa Commonwealth of VA Buildings Virginia Beach & Chesapeake, VA 47,366 13,150 8,000 4,194 6.8% 3Q17 Commonwealth of VA Greentree Wawa Chesapeake, VA 5,088 4,600 4,400 3,396 5.0% 1Q17 Wawa Oyster Point(4) Newport News, VA 100,139 6,500 - 3,793 16.4% 3Q16 GSA Non-Core Retail Portfolio Various 174,758 12,850 12,600 (27) 7.1% 2Q16 - 3Q16 Kroger, Family Dollar Richmond Tower Richmond, VA 206,969 78,000 77,000 26,674 7.9% 1Q16 Williams Mullen Oceaneering Chesapeake, VA 154,000 30,000 10,000 4,987 6.7% 4Q15 Oceaneering International Whetstone Apartments Durham, NC 203 units 35,625 17,600 7,210 5.7% 2Q15 NA Sentara Williamsburg Williamsburg, VA 49,200 15,450 15,200 6,197 6.3% 1Q15 Sentara Virginia Natural Gas Virginia Beach, VA 31,000 8,900 7,400 2,211 6.3% 4Q14 Virginia Natural Gas Total/Weighted Average 774,567 sf/ $209,475 $156,600 $58,635 7.2% 203 units (1) Contractual purchase price. (2) Value of OP Units/Stock at issuance. (3) Units are issuable contingent on the achievement of certain further occupancy requirements. (4) Anchor tenant vacated 12/31/16, which would represent a 2.5% Cash Cap Rate.


 
Construction Business Summary 21 Total Contract Work in Place as Estimated Date Highlighted Projects Location Value of 3/31/2019 Backlog of Completion Interlock Commercial Atlanta, GA $85,909 $5,937 $79,972 4Q 2020 Solis Apartments at Interlock Atlanta, GA 62,300 183 62,117 1Q 2021 Sub Total 148,209 6,120 142,089 All Other Projects 367,060 348,278 18,782 Total $515,269 $354,398 $160,871 Gross Profit Summary Trailing 12 Q1 2019 Months(1) (Unaudited) Revenue $17,036 $73,761 Expense (16,286) (67,500) Gross Profit $750 $6,261 (1) Includes gain on non-operating real estate of $3.4M for the three months ended 12/31/18.


 
Same Store NOI by Segment 22 $ in thousands (Reconciliation to GAAP located in appendix on pg. 34) Three months ended 3/31/2019 3/31/2018 $ Change % Change Office(1) (Unaudited) Revenue $5,326 $5,100 $226 4.4% Expenses(2) 1,859 1,859 - 0.0% Net Operating Income 3,467 3,241 226 7.0% Retail(1) Revenue 14,604 14,568 36 0.2% Expenses(2) 3,406 3,327 79 2.4% Net Operating Income 11,198 11,241 (43) -0.4% Multifamily(1) Revenue 5,449 5,035 414 8.2% Expenses(2) 2,086 1,951 135 6.9% Net Operating Income 3,363 3,084 279 9.0% Same Store Net Operating Income (NOI) $18,028 $17,566 $462 2.6% Net effect of straight-line rents ($596) (518) (78) Amortization of lease incentives and above (below) market rents ($6) (32) 26 Same store portfolio NOI, cash basis $17,426 $17,016 $410 2.4% NOI, Cash Basis: Office $3,136 $2,930 $206 7.0% Retail 11,028 11,067 (39) -0.4% Multifamily 3,262 3,019 243 8.0% $17,426 $17,016 $410 2.4% NOI: Office $3,467 $3,241 $226 7.0% Retail 11,198 11,241 (43) -0.4% Multifamily 3,363 3,084 279 9.0% $18,028 $17,566 $462 2.6% (1) See page 31 for Same Store vs. Non – Same Store Properties. (2) Excludes expenses associated with the Company’s in house asset management division of $472K and $502K for the 3 months ended 3/31/2019 & 3/31/2018.


 
Top 10 Tenants by ABR 23 $ in thousands As of March 31, 2019 Office Portfolio Number Lease Annualized Base % of Office Portfolio % of Total Portfolio Tenant of Leases Expiration Rent(1) Annualized Base Rent Annualized Base Rent Clark Nexsen 1 2029 $ 2,588 10.2% 2.4% Wework 1 2034 2,204 8.7% 2.0% Duke 1 2029 1,540 6.1% 1.4% Mythics 1 2030 1,187 4.7% 1.1% Hampton University 2 2019 - 2024 1,085 4.3% 1.0% Pender & Coward 1 2030 904 3.6% 0.8% Kimley-Horn 1 2027 876 3.5% 0.8% Troutman Sanders 1 2025 872 3.4% 0.8% The Art Institute 1 2019 869 3.4% 0.8% City of Va Beach Development Authority 1 2024 744 2.9% 0.7% Top 10 Total $ 12,869 50.8% 11.8% Retail Portfolio Number Lease Annualized Base % of Retail Portfolio % of Total Portfolio Tenant of Leases Expiration Rent(1) Annualized Base Rent Annualized Base Rent Harris Teeter/Kroger 11 2020 - 2036 $ 6,188 10.9% 5.6% Regal Cinemas 2 2022 - 2024 1,679 3.0% 1.5% Bed, Bath, & Beyond 4 2020 - 2024 1,677 3.0% 1.5% PetSmart 5 2020 - 2022 1,438 2.5% 1.3% Food Lion 3 2019 - 2022 1,291 2.3% 1.2% Lowes Foods, LLC 1 2037 930 1.6% 0.8% Dick's Sporting Goods 1 2020 840 1.5% 0.8% Weis Markets 1 2028 802 1.4% 0.7% Ross Dress for Less 2 2022 - 2025 762 1.3% 0.7% Petco 3 2020 - 2027 743 1.3% 0.7% Top 10 Total $ 16,350 28.8% 14.8% (1) Includes leases from the development properties that have been delivered, but not stabilized.


 
Office Lease Summary 24 Renewal Lease Summary GAAP Cash Number of Weighted Leases Net Rentable SF Leases Net Rentable Contractual Prior Rent Releasing Contractual Prior Rent Releasing Average Lease TI & LC Quarter Signed Signed Expiring SF Expiring Rent per SF per SF Spread Rent per SF per SF Spread Term (yrs) TI & LC per SF Q1 2019 1 11,995 3 15,865 $24.92 $21.30 17.0% $23.76 $23.18 2.5% 5.00 $164,879 $13.75 Q4 2018 3 5,490 2 1,915 26.13 24.97 4.6% 26.50 26.27 0.9% 3.86 165,800 30.20 Q3 2018 - - 1 9,337 - - 0.0% - - 0.0% - - - Q2 2018 3 28,910 6 13,225 28.88 28.41 1.7% 27.68 30.86 -10.3% 8.77 2,169,711 75.05 New Lease Summary(1) Number of Cash Weighted Leases Net Rentable SF Contractual Average TI & LC Quarter Signed Signed Rent per SF Lease Term TI & LC per SF Q1 2019 4 15,889 $25.07 4.88 $498,213 $31.36 Q4 2018 1 1,242 24.00 5.21 13,585 10.94 Q3 2018 1 1,806 26.00 5.00 14,958 8.28 Q2 2018 4 20,899 23.22 7.18 853,977 40.86 (1) Excludes leases from properties in development.


 
Office Lease Expirations 25 As of March 31, 2019 Square Footage % Portfolio % of Portfolio Annualized Base Number of Leases of Leases Net Rentable Annualized Base Annualized Rent per Leased Year Expiring Expiring(1) Square Feet Rent(1) Base Rent Square Foot Available - 64,047 6.7% $ - - $ - M-T-M 4 1,753 0.2% 61,840 0.2% 35.28 2019 13 82,090 8.6% 2,284,057 9.0% 27.82 2020 8 26,537 2.8% 787,030 3.1% 29.66 2021 9 51,479 5.4% 1,468,956 5.8% 28.54 2022 9 73,394 7.7% 2,085,561 8.2% 28.42 2023 11 63,441 6.7% 1,830,270 7.2% 28.85 2024 7 98,813 10.4% 2,522,331 10.0% 25.53 2025 7 70,062 7.4% 1,955,315 7.7% 27.91 2026 5 21,966 2.3% 522,296 2.1% 23.78 2027 3 49,081 5.2% 1,421,603 5.6% 28.96 2028 6 63,319 6.7% 1,731,733 6.8% 27.35 2029 6 146,437 15.4% 4,322,180 17.1% 29.52 Thereafter 3 137,767 14.4% 4,295,567 17.0% 31.18 Total / Weighted Average 91 950,186 99.9% $ 25,288,739 100.0% $ 28.54 160,000 18.0% 140,000 16.0% Square Feet % of Portfolio 14.0% 120,000 Under Lease ABR 12.0% 100,000 2,500 or less 3% 10.0% 2,501-10,000 16% 80,000 8.0% 10,001-20,000 25% 60,000 6.0% 20,001-40,000 25% 40,000 4.0% 40,001-100,000 30% Office Portfolio Total 100% 20,000 2.0% - 0.0% Leased Square Feet % ABR of Office Portfolio (1) Includes leases from the development properties that have been delivered, but not stabilized.


 
Retail Lease Summary 26 Renewal Lease Summary GAAP Cash Number of Net Weighted Leases Rentable SF Net Rentable SF Contractual Prior Rent per Releasing Contractual Prior Rent Releasing Average Lease TI & LC Quarter Signed Signed Leases Expiring Expiring Rent per SF SF Spread Rent per SF per SF Spread Term (yrs) TI & LC per SF Q1 2019 24 128,088 11 30,729 $16.08 $15.25 5.5% $15.96 $15.43 3.4% 5.36 $123,414 $0.96 Q4 2018 23 169,261 13 67,429 15.91 15.14 5.0% 15.78 15.36 2.8% 3.98 175,816 1.04 Q3 2018 10 28,101 11 19,775 29.36 27.23 7.8% 29.95 28.19 6.2% 5.23 115,732 4.12 Q2 2018 19 64,064 1 1,900 19.55 18.71 4.5% 19.33 19.13 1.0% 5.60 261,455 4.08 New Lease Summary(1) Number of Net Weighted Leases Rentable SF Cash Contractual Rent Average Lease TI & LC Quarter Signed Signed per SF Term (yrs) TI & LC per SF Q1 2019 3 4,001 $16.10 4.89 $22,127 $5.53 Q4 2018 7 60,363 15.09 10.83 2,710,665 44.91 Q3 2018 7 10,444 19.60 5.95 366,032 35.05 Q2 2018 9 29,646 25.08 8.63 1,041,670 35.14 (1) Excludes leases from properties in development.


 
Retail Lease Expirations 27 As of March 31, 2019 Square Footage % Portfolio % of Portfolio Annualized Base Number of Leases of Leases Net Rentable Annualized Base Annualized Rent per Leased Year Expiring Expiring(1) Square Feet Rent(1) Base Rent Square Foot Available - 194,720 5.2% $ - - $ - M-T-M 1 1,400 - 25,550 - 18.25 2019 46 250,884 6.7% 3,931,611 6.9% 15.67 2020 76 533,662 14.2% 7,707,508 13.6% 14.44 2021 68 306,147 8.1% 5,668,873 10.0% 18.52 2022 62 398,538 10.6% 6,808,144 12.0% 17.08 2023 59 432,951 11.5% 6,642,818 11.7% 15.34 2024 51 330,492 8.8% 5,428,848 9.6% 16.43 2025 24 297,789 7.9% 3,515,541 6.2% 11.81 2026 22 172,745 4.6% 3,021,398 5.3% 17.49 2027 19 121,426 3.2% 2,627,999 4.6% 21.64 2028 24 266,508 7.1% 3,882,909 6.9% 14.57 2029 13 84,929 2.3% 1,542,976 2.7% 18.17 Thereafter 16 368,243 9.8% 5,865,861 10.5% 15.93 Total / Weighted Average 481 3,760,434 100.0% $ 56,670,034 100.0% $ 15.89 600,000 16.0% 14.0% 500,000 Square Feet % of Portfolio 12.0% Under Lease ABR 400,000 10.0% 2,500 or less 13% 300,000 8.0% 2,501-10,000 30% 10,001-20,000 16% 6.0% 200,000 20,001-40,000 15% 4.0% 40,001-100,000 24% 100,000 2.0% Greater than 100,000 2% - 0.0% Retail Portfolio Total 100% Leased Square Feet % ABR of Retail Portfolio (1) Includes leases from properties in development.


 
28 Appendix Definitions & Reconciliations


 
Definitions 29 NET OPERATING INCOME: We calculate Net Operating Income (“NOI”) as property revenues (base rent, expense reimbursements and other revenue) less property expenses (rental expenses and real estate taxes). Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to such other REITs’ NOI. NOI is not a measure of operating income or cash flows from operating activities as measured by GAAP and is not indicative of cash available to fund cash needs. As a result, NOI should not be considered an alternative to cash flows as a measure of liquidity. We consider NOI to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of our real estate business. To calculate NOI on a cash basis, we adjust NOI to exclude the net effects of straight-line rent and the amortization of lease incentives and above/below market rents. FUNDS FROM OPERATIONS: We calculate Funds From Operations (“FFO”) in accordance with the standards established by the National Association of Real Estate Investment Trusts (“Nareit”). Nareit defines FFO as net income (loss) (calculated in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding depreciation and amortization related to real estate, gains or losses from the sale of certain real estate assets, gains and losses from change in control, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared period-over-period, captures trends in occupancy rates, rental rates and operating costs. Other equity REITs may not calculate FFO in accordance with the Nareit definition as we do, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. NORMALIZED FUNDS FROM OPERATIONS: We calculate Normalized Funds From Operations (“Normalized FFO") as FFO calculated in accordance with the standards established by Nareit, adjusted for acquisition, development and other pursuit costs, gains or losses from the early extinguishment of debt, impairment of intangible assets and liabilities, mark-to-market adjustments on interest rate derivatives, severance related costs, and other non-comparable items. Management believes that the computation of FFO in accordance to Nareit’s definition includes certain items that are not indicative of the results provided by the Company’s operating portfolio and affect the comparability of the Company’s period-over-period performance. Our calculation of Normalized FFO differs from Nareit's definition of FFO. Other equity REITs may not calculate Normalized FFO in the same manner as us, and, accordingly, our Normalized FFO may not be comparable to other REITs' Normalized FFO.


 
Definitions 30 ADJUSTED FUNDS FROM OPERATIONS: We calculate Adjusted Funds From Operations (“AFFO”) as Normalized FFO adjusted for the impact of non-cash stock compensation, tenant improvement, leasing commission and leasing incentive costs associated with second generation rental space, capital expenditures, non-cash interest expense, proceeds from the sale of a purchase option (in excess of amounts recognized in net income), straight-line rents, the amortization of leasing incentives and above (below) market rents and proceeds from government development grants. Management believes that AFFO provides useful supplemental information to investors regarding our operating performance as it provides a consistent comparison of our operating performance across time periods and allows investors to more easily compare our operating results with other REITs. However, other REITs may use different methodologies for calculating AFFO or similarly entitled FFO measures and, accordingly, our AFFO may not always be comparable to AFFO or other similarly entitled FFO measures of other REITs. ADJUSTED EBITDA: We calculate Adjusted EBITDA as net income (loss) (calculated in accordance with GAAP), excluding interest expense, income taxes, depreciation and amortization, gains (or losses) from sales of depreciable operating property, impairment of real estate assets 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.


 
Definitions 31 SAME STORE PORTFOLIO: We define same store properties as those that we owned and operated and that were stabilized for the entirety of both periods compared. We generally consider a property to be stabilized upon the earlier of: (i) the quarter after the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy. Additionally, any property that is fully or partially taken out of service for the purpose of redevelopment is no longer considered stabilized until the redevelopment activities are complete, the asset is placed back into service, and the stabilization criteria above are again met. A property may also be fully or partially taken out of service as a result of a disposition, depending on the significance of the portion of the property disposed. Finally, any property classified as Held for Sale is taken out of service for the purpose computing same store operating results. The following table shows the properties included in the same store and non-same store portfolio for the comparative periods presented.


 
32 Same Store vs. Non-Same Store Properties Three Months Ended Three Months Ended 3/31/2019 to 2018 3/31/2019 to 2018 Same Non-Same Same Non-Same Store Store Store 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 Wendover Village III X Hanbury Village X Office Properties Harper Hill Commons X 4525 Main Street X Harrisonburg Regal X Armada Hoffler Tower X Indian Lakes Crossing X One City Center X Lexington Square X One Columbus X Lightfoot Marketplace X Two Columbus X North Hampton Market X Multifamily Properties North Point Center X Encore Apartments X Oakland Marketplace X Greenside Apartments X Parkway Centre X Liberty Apartments X Parkway Marketplace X Premier Apartments X Patterson Place X Smith’s Landing X Perry Hall Marketplace X The Cosmopolitan X Premier Retail X Johns Hopkins Village X


 
33 Reconciliation to Property Portfolio NOI $ in thousands Three months ended 3/31 2019 2018 Office Same Store(1) Rental revenues $5,326 $5,100 Property expenses 1,859 1,859 NOI 3,467 3,241 Non-Same Store NOI(2) 77 (94) Segment NOI $3,544 $3,147 Retail Same Store(1) Rental revenues $14,604 $14,568 Property expenses 3,406 3,327 NOI 11,198 11,241 Non-Same Store NOI(2) 1,648 1,133 Segment NOI $12,846 $12,374 Multifamily Same Store(1) Rental revenues $5,449 $5,035 Property expenses 2,086 1,951 NOI 3,363 3,084 Non-Same Store NOI(2) 1,303 857 Segment NOI $4,666 $3,941 Total Property Portfolio NOI $21,056 $19,462 (1) See page 32 for the Same Store vs. Non-Same Store properties (2) Includes expenses associated with the company’s in house asset management division.


 
34 Reconciliation to Property Portfolio NOI $ in thousands Three months ended 3/31/2019 Diversified Portfolio Office Retail Multifamily Total NOI - Cash Basis $0 $10,338 $2,560 $12,898 Net effect of straight-line rents 0 154 113 267 Amortization of lease incentives and (above) below market rents - 177 (13) 164 NOI $0 $10,669 $2,660 $13,329 Town Center of Virginia Beach NOI - Cash Basis $3,287 $2,125 $1,661 $7,073 Net effect of straight-line rents 403 (33) 27 397 Amortization of lease incentives and (above) below market rents (72) (73) - (145) Elimination of AHH rent (232) (109) - (341) NOI $3,386 $1,910 $1,688 $6,984 NOI Diversified Portfolio $0 $10,669 $2,660 $13,329 Town Center of Virginia Beach 3,386 1,910 1,688 6,984 Unstabilized Properties 158 267 318 743 Total Property Portfolio NOI $3,544 $12,846 $4,666 $21,056


 
Reconciliation to GAAP Net Income 35 $ in thousands Three months ended 3/31/2019 Total Rental General Contracting & Office Retail Multifamily Properties Real Estate Services Total Segment revenues $ 5,556 $ 17,257 $ 8,096 $ 30,909 $ 17,036 $ 47,945 Segment expenses 2,012 4,411 3,430 9,853 16,286 26,139 Net operating income $ 3,544 $ 12,846 $ 4,666 $ 21,056 $ 750 $ 21,806 Depreciation and amortization (9,904) General and administrative expenses (3,401) Acquisition, development and other pursuit costs (400) Interest income 5,319 Interest expense (5,886) Equity in income of unconsolidated real estate entities 273 Change in fair value of interest rate derivatives (1,463) Other income (loss) benefit 60 Income tax benefit (provision) 110 Net income $ 6,514


 
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