Armada Hoffler Reports Fourth Quarter and Full Year 2023 Results
- Positive aspects include a 7.6% year-over-year increase in dividends declared, an increase in property segment NOI, and the introduction of 2024 full-year Normalized FFO guidance. The company reaffirmed its investment grade credit rating of BBB by Morningstar DBRS.
- The appointment of Shawn Tibbetts as President and Louis Haddad as the expected Board Chairman are part of the leadership succession planning initiatives. The Company reported a weighted average stabilized portfolio occupancy of 96.1% as of December 31, 2023.
- Negative aspects include a net loss of $23.9 million for Q4 and $4.5 million for the full year, lower FFO and Normalized FFO compared to the previous year, and unrealized losses on non-designated interest rate derivatives that negatively affected FFO.
- The Company repurchased 1,204,838 shares of common stock for a total of $12.6 million in 2023. Same Store NOI for the fourth quarter of 2023 decreased 6.0% on a GAAP basis compared to the same period in 2022.
- The net loss reported for Q4 and the full year, lower FFO and Normalized FFO compared to the previous year, and the impact of unrealized losses on interest rate derivatives negatively affecting FFO are significant negative aspects of the PR.
Insights
The reported net loss and normalized funds from operations (FFO) are critical metrics for evaluating a real estate investment trust's (REIT) financial health. The net loss indicates that the company's expenses have exceeded its revenue, which could be a red flag for investors. However, the normalized FFO, which excludes certain one-time charges and gains, suggests a more stable operational performance, providing a clearer picture of the REIT's profitability from its core business activities.
The increase in the quarterly cash dividend and year-over-year dividend growth reflects the company's confidence in its financial stability and commitment to shareholder returns. The positive property segment net operating income (NOI) growth indicates effective property management and potential for value appreciation. However, the decrease in FFO compared to the previous year could concern investors, as it may impact the company's ability to sustain dividend increases.
The introduction of the 2024 full-year normalized FFO guidance provides transparency and helps set investor expectations. The guidance range suggests management's confidence in the company's future performance, despite the net loss reported. The reaffirmed investment grade credit rating by Morningstar DBRS supports the company's financial credibility and access to capital markets.
The increase in commercial lease renewal spreads and high occupancy rates across retail, office and multifamily portfolios indicate a robust demand for the company's properties. This demand is a positive sign for the company's future revenue streams. The execution of new leases and lease renewals during the quarter signifies active property management and the ability to attract and retain tenants, which is vital for maintaining steady NOI.
The Same Store NOI performance provides insight into the organic growth of the property portfolio, with a slight increase on a cash basis suggesting resilience in the company's core operations. However, the decrease on a GAAP basis may require further analysis to understand the underlying factors that could potentially impact long-term performance.
The share repurchase activity reflects management's belief that the company's stock is undervalued, signaling a potential opportunity for value creation. The construction backlog represents future revenue potential, while the construction gross profit contributes to the company's diversified income stream.
The reported unrealized losses on non-designated interest rate derivatives are noteworthy as they have negatively impacted FFO. This could be indicative of the company's exposure to interest rate volatility and the effectiveness of its hedging strategies. Investors should monitor how interest rate fluctuations could affect the company's cost of capital and profitability.
The company's balance sheet and financing activities, including the level of indebtedness and fixed interest rate exposure, are crucial for assessing financial risk. The high percentage of debt with fixed interest rates or hedged with interest rate swaps or caps provides a measure of protection against rising interest rates, which is particularly relevant in a fluctuating rate environment.
Overall, while the reported net loss may raise some concerns, the company's operational metrics, such as NOI growth, occupancy rates and lease spreads, combined with strategic financial management, suggest resilience and potential for future growth.
Net Loss of
and
Normalized FFO of
and
Announced
Dividends Declared During the Year Represent a
Introduced 2024 Full-Year Normalized FFO Guidance Range of
VIRGINIA BEACH, Va., Feb. 22, 2024 (GLOBE NEWSWIRE) -- Armada Hoffler Properties, Inc. (NYSE: AHH) today announced its results for the quarter and year ended December 31, 2023 and provided an update on current events.
Highlights include:
- Net loss attributable to common stockholders and OP Unitholders of
$23.9 million and$4.5 million for the three months and year ended December 31, 2023, respectively, or$0.27 and$0.05 per diluted share, respectively.
- Funds from operations attributable to common stockholders and OP Unitholders ("FFO") of
$11.1 million and$90.7 million for the three months and year ended December 31, 2023, respectively, or$0.13 and$1.02 per diluted share, respectively. See "Non-GAAP Financial Measures."
- Normalized funds from operations attributable to common stockholders and OP Unitholders ("Normalized FFO") of
$27.9 million and$110.5 million for the three months and year ended December 31, 2023, or$0.31 and$1.24 per diluted share, respectively. See "Non-GAAP Financial Measures."
- Investment grade credit rating of BBB reaffirmed by Morningstar DBRS.
- Announced that the Board of Directors declared a cash dividend of
$0.20 5 per common share, representing a5% increase over the prior quarter's dividend.
- Dividends declared during the year ended December 31, 2023 of
$0.77 5 per share, representing a7.6% year-over-year increase.
- Introduced 2024 full-year Normalized FFO guidance of
$1.21 t o$1.27 per diluted share.
"As we reflect on our performance throughout the fourth quarter and the year, I am proud of our team's dedication and resilience, which has translated into exceptional results,” said Louis Haddad, Chief Executive Officer. “Best in market properties in healthy markets give us the ability to continue adding to earnings and dividends. We remain steadfast in our commitment to delivering value for our stakeholders and seizing opportunities for strategic expansion."
- As part of the Company's leadership succession planning initiatives, appointed Shawn Tibbetts to President, in addition to his existing role as Chief Operating Officer. The Company's Board of Directors also endorses founder and current Chairman Dan Hoffler's intent to relinquish his role as Board Chairman in June 2024, whose role is expected to be assumed by Louis Haddad. Pending the shareholders’ vote at the 2024 Annual Meeting of Stockholders, Hoffler will continue to serve as a member of the Board of Directors as Chairman Emeritus.
- Fourth quarter commercial lease renewal spreads increased
11.3% on a GAAP basis and0.4% on a cash basis.
- Executed 16 lease renewals and 8 new leases during the fourth quarter for an aggregate of 204,966 of net rentable square feet.
- Property segment net operating income ("NOI") of
$39.3 million for the fourth quarter of 2023, which represents a4.2% increase compared to$37.7 million for the fourth quarter of 2022.
- Property segment NOI of
$160.1 million for the year ended December 31, 2023, which represents a9.3% increase compared to$146.5 million for the year ended December 31, 2022.
- Same Store NOI for the fourth quarter of 2023 decreased
6.0% on a GAAP basis and increased less than0.1% on a cash basis compared to the fourth quarter of 2022.
- Same Store NOI for the year ended December 31, 2023 increased
0.9% on a GAAP basis and2.3% on a cash basis compared to the year ended December 31, 2022.
- For the year ended December 31, 2023, the Company repurchased 1,204,838 shares of common stock for a total of
$12.6 million .
- Third-party construction backlog as of December 31, 2023 was
$472.2 million and construction gross profit for the fourth quarter was$3.5 million .
- Weighted average stabilized portfolio occupancy was
96.1% as of December 31, 2023. Retail occupancy was97.4% , office occupancy was95.3% , and multifamily occupancy was95.5% .
- During the fourth quarter of 2023, unrealized losses on non-designated interest rate derivatives that negatively affected FFO were
$16.2 million . As of December 31, 2023, the value of the Company’s entire interest rate derivative portfolio, net of unrealized losses, was$28.9 million .
Financial Results
Net (loss) income attributable to common stockholders and OP Unitholders for the fourth quarter was a net loss of
Net (loss) income attributable to common stockholders and OP Unitholders for the full year was a net loss of
Operating Performance
At the end of the year, the Company’s retail, office, and multifamily stabilized property portfolios were
Total third-party construction contract backlog was
Interest income from real estate financing investments was
Balance Sheet and Financing Activity
As of December 31, 2023, the Company had
Outlook
The Company is introducing its 2024 full-year Normalized FFO guidance in the range of
| Full-year 2024 Guidance [1][2] | Expected Ranges | ||||
| Portfolio NOI | |||||
| Construction Segment Profit | |||||
| G&A Expenses | |||||
| Interest Income | |||||
| Interest Expense[3] | |||||
| Normalized FFO per diluted share | |||||
[1] Includes the following assumptions:
- Southern Post and T. Rowe Price Global HQ stabilized 4Q24
- Allied | Harbor Point delivered 3Q24 with 18-month lease-up to stabilization
- Opportunistic sale of common stock through the ATM program
- Begin funding new real estate financing project in the second half of 2024
- Construction gross profit consistent with 2023, resulting in profit recognition concentrated more in the first half of 2024
[2] Ranges exclude certain items per the Company's Normalized FFO definition: Normalized FFO excludes certain items, including acquisition, development, and other pursuit costs, debt extinguishment losses, prepayment penalties, impairment of intangible assets and liabilities, mark-to-market adjustments on interest rate derivatives not designated as cash flow hedges, amortization of payments made to purchase interest rate caps and swaps designated as cash flow hedges, provision for unrealized non-cash credit losses, amortization of right-of-use assets attributable to finance leases, severance related costs, and other non-comparable items. See "Non-GAAP Financial Measures." The Company does not provide a reconciliation for its guidance range of Normalized FFO per diluted share to net income per diluted share, the most directly comparable forward-looking GAAP financial measure, because it is unable to provide a meaningful or accurate estimate of reconciling items and the information is not available without unreasonable effort as a result of the inherent difficulty of forecasting the timing and/or amounts of various items that would impact net income per diluted share. For the same reasons, the Company is unable to address the probable significance of the unavailable information and believes that providing a reconciliation for its guidance range of Normalized FFO per diluted share would imply a degree of precision for its forward-looking net income per diluted share that could be misleading to investors.
[3] Includes the interest expense on finance leases and interest receipts of non-designated derivatives.
Supplemental Financial Information
Further details regarding operating results, properties, and leasing statistics can be found in the Company’s supplemental financial package available on the Investors page at ArmadaHoffler.com.
Webcast and Conference Call
The Company will host a webcast and conference call on Thursday, February 22, 2024 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, ArmadaHoffler.com. To participate in the call, please dial (+1) 888 259 6580 (toll-free dial-in number) or (+1) 416 764 8624 (toll dial-in number). The conference ID is 54806922. A replay of the conference call will be available through March 23, 2024 by dialing (+1) 877 674 7070 (toll-free dial-in number) or (+1) 416 764 8692 (toll dial-in number) and providing passcode 806922 #.
About Armada Hoffler Properties, Inc.
Armada Hoffler (NYSE: AHH) is a vertically integrated, self-managed real estate investment trust ("REIT") with over four decades of experience developing, building, acquiring, and managing high-quality retail, office, 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. Founded in 1979 by Daniel A. Hoffler, Armada Hoffler has elected to be taxed as a REIT for U.S. federal income tax purposes. For more information visit ArmadaHoffler.com.
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 real estate financing program, the Company’s construction and development business, including backlog and timing of deliveries and estimated costs, financing activities, as well as acquisitions, dispositions, and the Company’s financial outlook, guidance, and expectations. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise, and the Company may not be able to realize any forward-looking statement. 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, 2022, and the other documents filed by the Company with the Securities and Exchange Commission (the "SEC") from time to time. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in the Company's expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by applicable law.
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. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or service indebtedness. Also, FFO should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.
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, debt extinguishment losses, prepayment penalties, impairment of intangible assets and liabilities, mark-to-market adjustments on interest rate derivatives not designated as cash flow hedges, amortization of payments made to purchase interest rate caps and swaps designated as cash flow hedges, provision for unrealized non-cash credit losses, amortization of right-of-use assets attributable to finance leases, severance related costs, and other non-comparable items. Other equity REITs may not calculate Normalized FFO in the same manner as we do, and, accordingly, our Normalized FFO may not be comparable to such other REITs' Normalized FFO.
NOI is the measure used by the Company’s chief operating decision-maker to assess segment performance. The Company calculates NOI as segment revenues less segment expenses. Segment revenues include rental revenues (base rent, expense reimbursements, termination fees, and other revenue) for our property segments, general contracting and real estate services revenues for our general contracting and real estate services segment, and interest income for our real estate financing segment. Segment expenses include rental expenses and real estate taxes for our property segments, general contracting and real estate services expenses for our general contracting and real estate services segment, and interest expense for our real estate financing segment. Segment NOI for the general contracting and real estate services and real estate financing segments is also referred to as segment gross profit. NOI is not a measure of operating income or cash flows from operating activities as measured in accordance with GAAP and is not indicative of cash available to fund cash needs. As a result, NOI should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate NOI in the same manner. The Company considers NOI to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of the Company’s real estate and construction businesses. 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.
For reference, as an aid in understanding the Company’s computation of NOI, NOI Cash Basis, FFO and Normalized FFO, a reconciliation of net income calculated in accordance with GAAP to NOI, NOI Cash Basis, FFO and Normalized FFO has been included further in this release.
| ARMADA HOFFLER PROPERTIES, INC. | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (dollars in thousands) | |||||||
| December 31, | |||||||
| 2023 | 2022 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Real estate investments: | |||||||
| Income producing property | $ | 2,093,032 | $ | 1,884,214 | |||
| Held for development | 11,978 | 6,294 | |||||
| Construction in progress | 102,277 | 53,067 | |||||
| 2,207,287 | 1,943,575 | ||||||
| Accumulated depreciation | (393,169 | ) | (329,963 | ) | |||
| Net real estate investments | 1,814,118 | 1,613,612 | |||||
| Cash and cash equivalents | 27,920 | 48,139 | |||||
| Restricted cash | 2,246 | 3,726 | |||||
| Accounts receivable, net | 45,529 | 39,186 | |||||
| Notes receivable, net | 94,172 | 136,039 | |||||
| Construction receivables, including retentions, net | 126,443 | 70,822 | |||||
| Construction contract costs and estimated earnings in excess of billings | 104 | 342 | |||||
| Equity method investment | 142,031 | 71,983 | |||||
| Operating lease right-of-use assets | 23,085 | 23,350 | |||||
| Finance lease right-of-use assets | 90,565 | 45,878 | |||||
| Acquired lease intangible assets | 109,137 | 103,870 | |||||
| Other assets | 87,548 | 85,363 | |||||
| Total Assets | $ | 2,562,898 | $ | 2,242,310 | |||
| LIABILITIES AND EQUITY | |||||||
| Indebtedness, net | $ | 1,396,965 | $ | 1,068,261 | |||
| Accounts payable and accrued liabilities | 31,041 | 26,839 | |||||
| Construction payables, including retentions | 128,290 | 93,472 | |||||
| Billings in excess of construction contract costs and estimated earnings | 21,414 | 17,515 | |||||
| Operating lease liabilities | 31,528 | 31,677 | |||||
| Finance lease liabilities | 91,869 | 46,477 | |||||
| Other liabilities | 56,613 | 54,055 | |||||
| Total Liabilities | 1,757,720 | 1,338,296 | |||||
| Total Equity | 805,178 | 904,014 | |||||
| Total Liabilities and Equity | $ | 2,562,898 | $ | 2,242,310 | |||
| ARMADA HOFFLER PROPERTIES, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED INCOME STATEMENTS | ||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| Revenues | ||||||||||||||||
| Rental revenues | $ | 59,842 | $ | 55,692 | $ | 238,924 | $ | 219,294 | ||||||||
| General contracting and real estate services revenues | 126,911 | 95,912 | 413,131 | 234,859 | ||||||||||||
| Interest income | 4,280 | 6,568 | 15,103 | 16,978 | ||||||||||||
| Total revenues | 191,033 | 158,172 | 667,158 | 471,131 | ||||||||||||
| Expenses | ||||||||||||||||
| Rental expenses | 15,027 | 12,641 | 56,419 | 50,742 | ||||||||||||
| Real estate taxes | 5,532 | 5,362 | 22,442 | 22,057 | ||||||||||||
| General contracting and real estate services expenses | 123,377 | 93,667 | 399,713 | 227,158 | ||||||||||||
| Depreciation and amortization | 35,270 | 18,109 | 96,078 | 72,974 | ||||||||||||
| Amortization of right-of-use assets - finance leases | 300 | 277 | 1,349 | 1,110 | ||||||||||||
| General and administrative expenses | 4,336 | 3,512 | 18,122 | 15,691 | ||||||||||||
| Acquisition, development, and other pursuit costs | 66 | — | 84 | 37 | ||||||||||||
| Impairment charges | (5 | ) | 83 | 102 | 416 | |||||||||||
| Total expenses | 183,903 | 133,651 | 594,309 | 390,185 | ||||||||||||
| Gain on real estate dispositions, net | — | 42 | 738 | 53,466 | ||||||||||||
| Operating income | 7,130 | 24,563 | 73,587 | 134,412 | ||||||||||||
| Interest expense | (16,435 | ) | (10,933 | ) | (57,810 | ) | (39,680 | ) | ||||||||
| Loss on extinguishment of debt | — | (475 | ) | — | (3,374 | ) | ||||||||||
| Change in fair value of derivatives and other | (11,266 | ) | 1,186 | (6,242 | ) | 8,698 | ||||||||||
| Unrealized credit loss release (provision) | 297 | 232 | (574 | ) | (626 | ) | ||||||||||
| Other income (expense), net | (293 | ) | (37 | ) | 31 | 378 | ||||||||||
| (Loss) income before taxes | (20,567 | ) | 14,536 | 8,992 | 99,808 | |||||||||||
| Income tax (provision) benefit | (495 | ) | 5 | (1,329 | ) | 145 | ||||||||||
| Net (loss) income | (21,062 | ) | 14,541 | 7,663 | 99,953 | |||||||||||
| Net loss (income) attributable to noncontrolling interests in investment entities | 11 | (137 | ) | (605 | ) | (5,948 | ) | |||||||||
| Preferred stock dividends | (2,887 | ) | (2,887 | ) | (11,548 | ) | (11,548 | ) | ||||||||
| Net (loss) income attributable to common stockholders and OP Unitholders | $ | (23,938 | ) | $ | 11,517 | $ | (4,490 | ) | $ | 82,457 | ||||||
| ARMADA HOFFLER PROPERTIES, INC. | ||||||||||||||||
| RECONCILIATION OF NET INCOME TO FFO & NORMALIZED FFO | ||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| Net (loss) income attributable to common stockholders and OP Unitholders | $ | (23,938 | ) | $ | 11,517 | $ | (4,490 | ) | $ | 82,457 | ||||||
| Depreciation and amortization (1) | 35,069 | 17,887 | 95,208 | 71,971 | ||||||||||||
| Loss (Gain) on operating real estate dispositions (2) | — | 11 | — | (47,984 | ) | |||||||||||
| Impairment of real estate assets | — | — | — | 201 | ||||||||||||
| FFO attributable to common stockholders and OP Unitholders | $ | 11,131 | $ | 29,415 | $ | 90,718 | $ | 106,645 | ||||||||
| Acquisition, development and other pursuit costs | 66 | — | 84 | 37 | ||||||||||||
| Accelerated amortization of intangible assets and liabilities | (38 | ) | 83 | (653 | ) | 215 | ||||||||||
| Loss on extinguishment of debt | — | 475 | — | 3,374 | ||||||||||||
| Unrealized credit loss (release) provision | (297 | ) | (232 | ) | 574 | 626 | ||||||||||
| Amortization of right-of-use assets - finance leases | 300 | 277 | 1,349 | 1,110 | ||||||||||||
| Decrease (Increase) in fair value of derivatives not designated as cash flow hedges | 16,159 | (1,186 | ) | 14,185 | (8,698 | ) | ||||||||||
| Amortization of interest rate derivative premiums on designated cash flow hedges | 612 | 1,801 | 4,210 | 3,849 | ||||||||||||
| Normalized FFO available to common stockholders and OP Unitholders | $ | 27,933 | $ | 30,633 | $ | 110,467 | $ | 107,158 | ||||||||
| Net (loss) income attributable to common stockholders and OP Unitholders per diluted share and unit | $ | (0.27 | ) | $ | 0.13 | $ | (0.05 | ) | $ | 0.93 | ||||||
| FFO attributable to common stockholders and OP Unitholders per diluted share and unit | $ | 0.13 | $ | 0.33 | $ | 1.02 | $ | 1.21 | ||||||||
| Normalized FFO attributable to common stockholders and OP Unitholders per diluted share and unit | $ | 0.31 | $ | 0.35 | $ | 1.24 | $ | 1.22 | ||||||||
| Weighted-average common shares and units - diluted | 88,733 | 88,341 | 88,864 | 88,192 | ||||||||||||
________________________________________
| (1) The adjustment for depreciation and amortization for each of the three months ended December 31, 2023 and 2022 excludes |
| (2) ) The adjustment for gain on operating real estate dispositions for the year ended December 31, 2023 excludes |
| ARMADA HOFFLER PROPERTIES, INC. | ||||||||||||||||
| RECONCILIATION OF NET INCOME TO SAME STORE NOI, CASH BASIS | ||||||||||||||||
| (in thousands) (unaudited) | ||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| Retail Same Store (1) | ||||||||||||||||
| Same Store NOI, Cash Basis | $ | 15,246 | $ | 15,325 | $ | 61,848 | $ | 59,461 | ||||||||
| GAAP Adjustments (2) | 1,009 | 842 | 4,007 | 3,611 | ||||||||||||
| Same Store NOI | 16,255 | 16,167 | 65,855 | 63,072 | ||||||||||||
| Non-Same Store NOI (3) | 2,031 | 307 | 6,931 | 630 | ||||||||||||
| Segment NOI | 18,286 | 16,474 | 72,786 | 63,702 | ||||||||||||
| Office Same Store (4) | ||||||||||||||||
| Same Store NOI, Cash Basis | 11,813 | 11,855 | 25,302 | 26,009 | ||||||||||||
| GAAP Adjustments (2) | (1,195 | ) | 1,277 | (1,643 | ) | 370 | ||||||||||
| Same Store NOI | 10,618 | 13,132 | 23,659 | 26,379 | ||||||||||||
| Non-Same Store NOI (3) | 1,330 | (246 | ) | 27,639 | 21,322 | |||||||||||
| Segment NOI | 11,948 | 12,886 | 51,298 | 47,701 | ||||||||||||
| Multifamily Same Store (5) | ||||||||||||||||
| Same Store NOI, Cash Basis | 8,121 | 7,995 | 27,234 | 26,390 | ||||||||||||
| GAAP Adjustments (2) | 253 | 212 | 1,015 | 850 | ||||||||||||
| Same Store NOI | 8,374 | 8,207 | 28,249 | 27,240 | ||||||||||||
| Non-Same Store NOI (3) | 675 | 122 | 7,730 | 7,852 | ||||||||||||
| Segment NOI | 9,049 | 8,329 | 35,979 | 35,092 | ||||||||||||
| Total Property NOI | 39,283 | 37,689 | 160,063 | 146,495 | ||||||||||||
| General contracting & real estate services gross profit | 3,534 | 2,245 | 13,418 | 7,701 | ||||||||||||
| Real estate financing gross profit | 4,951 | 7,405 | 17,842 | 19,957 | ||||||||||||
| Interest income (6) | 4,280 | 6,568 | 15,103 | 16,978 | ||||||||||||
| Depreciation and amortization | (35,270 | ) | (18,109 | ) | (96,078 | ) | (72,974 | ) | ||||||||
| General and administrative expenses | (4,336 | ) | (3,512 | ) | (18,122 | ) | (15,691 | ) | ||||||||
| Acquisition, development and other pursuit costs | (66 | ) | — | (84 | ) | (37 | ) | |||||||||
| Impairment charges | 5 | (83 | ) | (102 | ) | (416 | ) | |||||||||
| Gain on real estate dispositions, net | — | 42 | 738 | 53,466 | ||||||||||||
| Interest expense (7) | (16,435 | ) | (10,933 | ) | (57,810 | ) | (39,680 | ) | ||||||||
| Loss on extinguishment of debt | — | (475 | ) | — | (3,374 | ) | ||||||||||
| Unrealized credit loss release (provision) | 297 | 232 | (574 | ) | (626 | ) | ||||||||||
| Amortization of right-of-use assets - finance leases | (300 | ) | (277 | ) | (1,349 | ) | (1,110 | ) | ||||||||
| Change in fair value of derivatives and other | (11,266 | ) | 1,186 | (6,242 | ) | 8,698 | ||||||||||
| Other income (expense), net | (293 | ) | (37 | ) | 31 | 378 | ||||||||||
| Income tax (provision) benefit | (495 | ) | 5 | (1,329 | ) | 145 | ||||||||||
| Net (loss) income | (60,345 | ) | (23,148 | ) | 7,663 | 99,953 | ||||||||||
| Net loss (income) attributable to noncontrolling interests in investment entities | 11 | (137 | ) | (605 | ) | (5,948 | ) | |||||||||
| Preferred stock dividends | (2,887 | ) | (2,887 | ) | (11,548 | ) | (11,548 | ) | ||||||||
| Net (loss) income attributable to AHH and OP unitholders | $ | (63,221 | ) | $ | (26,172 | ) | $ | (4,490 | ) | $ | 82,457 | |||||
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| (1) Retail same-store portfolio excludes Pembroke Square, The Interlock Retail, and Columbus Village II for the three and twelve months ended December 31, 2023 and 2022. |
| (2) GAAP Adjustments include adjustments for straight-line rent, termination fees, deferred rent, recoveries of deferred rent, and amortization of lease incentives. |
| (3) Includes expenses associated with the Company's in-house asset management division. |
| (4) Office same-store portfolio excludes The Interlock Office for the three and twelve months ended December 31, 2023 and 2022. Office same-store portfolio also excludes Wills Wharf and the Constellation Office for the twelve months ended December 31, 2023 and 2022. |
| (5) Multifamily same-store portfolio excludes Chronicle Mill, The Residences at Annapolis Junction, Hoffler Place, and Summit Place for the three and twelve months ended December 31, 2023 and 2022. Multifamily same-store portfolio also excludes 1305 Dock Street and The Everly for the twelve months ended December 31, 2023 and 2022. |
| (6) Excludes real estate financing segment interest income. |
| (7) Excludes real estate financing segment interest expense. |
Contact:
Chelsea Forrest
Armada Hoffler Properties, Inc.
Director of Corporate Communications and Investor Relations
Email: CForrest@ArmadaHoffler.com
Phone: (757) 612-4248
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