Armada Hoffler Reports Second Quarter 2025 Results

GAAP Net Income of $0.04 Per Diluted Share for the Second Quarter Normalized FFO of $0.25 Per Diluted Share for the Second Quarter Same Store NOI Growth of 1.4% (GAAP) Positive Office Releasing Spreads of 11.7% (GAAP) and 5.5% (Cash) Positive Retail Renewal Spreads of 10.8% (GAAP) and 5.5% (Cash) Approximately 168K Net Rentable Square Feet of New and Renewed Commercial Lease Space Maintained 2025 Full-Year Normalized FFO Guidance Range of $1.00 to $1.10 per Diluted Share VIRGINIA BEACH, Va., Aug. 04, 2025 (GLOBE NEWSWIRE) -- Armada Hoffler Properties, Inc. (NYSE: AHH) today announced its results for the quarter ended June 30, 2025 and provided an update on current events and earnings guidance. Second Quarter and Recent Highlights: Net income attributable to common stockholders and OP Unit holders of $3.9 million, or $0.04 per diluted share, compared to net income attributable to common stockholders and OP Unit holders of $0.4 million, or $0.00 per diluted share, for the three months ended June 30, 2024. Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $19.0 million, or $0.19 per diluted share, compared to $22.4 million, or $0.25 per diluted share, for the three months ended June 30, 2024. See "Non-GAAP Financial Measures." Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $25.4 million, or $0.25 per diluted share, compared to $30.2 million, or $0.34 per diluted share, for the three months ended June 30, 2024. See "Non-GAAP Financial Measures." As of June 30, 2025, weighted average stabilized portfolio occupancy was 94.9%. Retail occupancy was 94.2%, office occupancy was 96.3%, and multifamily occupancy was 94.0%. Positive spreads on renewals across all commercial segments: Retail 10.8% (GAAP) and 5.5% (Cash)Office 11.7% (GAAP) and 5.5% (Cash) Executed 16 commercial lease renewals and 10 new commercial leases during the second quarter for an aggregate of approximately 168,000 of net rentable square feet. “We believe our focus on high-quality properties that generate stable, predictable income positions us to deliver long-term value to our shareholders,” said Shawn Tibbetts, Chief Executive Officer and President. “We are building on our strengths to create a more agile Armada Hoffler; one positioned to deliver consistent, durable earnings growth and long-term value.” Same Store Net Operating Income ("NOI") increased 1.4% on a GAAP basis compared to the quarter ended June 30, 2024. Third-party construction backlog as of June 30, 2025 was $106.6 million and general contracting and real estate services gross profit for the second quarter was $1.4 million. During the second quarter of 2025, unrealized gains on non-designated interest rate derivatives that positively affected FFO were $3.8 million. As of June 30, 2025, the value of the Company’s entire interest rate derivative portfolio, net of unrealized gains, was $8.2 million. These gains are excluded from Normalized FFO. On June 10, 2025, the Company acquired the remaining interest of its partner for the Harbor Point Parcel 4 (“Allied | Harbor Point”) project, resulting in Harbor Point Parcel 4 Development, LLC becoming a wholly owned subsidiary of the Company. On July 22, 2025, the Company, as parent guarantor, and Armada Hoffler, L.P., the Company’s operating partnership (the “Operating Partnership”), as borrower, entered into a note purchase agreement with institutional investors, pursuant to which the Operating Partnership sold, and the institutional investors purchased, an aggregate of $115.0 million of senior unsecured notes of the Operating Partnership, consisting of (a) $25.0 million aggregate principal amount of 5.57% Senior Notes, Series A, due July 22, 2028, (b) $45.0 million aggregate principal amount of 5.78% Senior Notes, Series B, due July 22, 2030 and (c) $45.0 million aggregate principal amount of 6.09% Senior Notes, Series C, due July 22, 2032 (collectively, the “Notes”). The Company utilized the proceeds of the sale of the Notes to repay the $65.0 million construction loan secured by the Southern Post mixed-use asset and $48.0 million under the Company’s revolving credit facility. On July 24, 2025, the Company entered into four interest rate swap agreements with a total notional of $820.0 million and a SOFR rate of 2.25%. The interest rate swaps will expire on August 1, 2026. The Company paid $14.0 million in premiums for the transactions. Financial Results Net income attributable to common stockholders and OP Unit holders for the second quarter was $3.9 million compared to net income attributable to common stockholders and OP Unit holders of $0.4 million for the second quarter of 2024. The period-over-period change was primarily due to the $6.9 million gain on consolidation of Allied | Harbor Point, partially offset by conversion of development property into the operating portfolio. FFO attributable to common stockholders and OP Unit holders for the second quarter was $19.0 million compared to $22.4 million for the second quarter of 2024. The year-over-year decrease in FFO was primarily due to a decrease in general contracting and real estate services gross profit, an increase in interest expense, and the recognition of equity in loss of unconsolidated real estate entities, partially offset by an increase in portfolio NOI recognized during the quarter. Normalized FFO attributable to common stockholders and OP Unit holders for the second quarter decreased to $25.4 million compared to $30.2 million for the second quarter of 2024. The year-over-year decrease in Normalized FFO was primarily due to the decrease in general contracting and real estate services gross profit and the recognition of equity in loss of unconsolidated real estate entities, partially offset by an increase in portfolio NOI recognized during the quarter. Operating Performance At the end of the second quarter, the Company’s retail, office, and multifamily stabilized operating property portfolios were 94.2%, 96.3%, and 94.0% occupied, respectively. Total third party construction contract backlog was $106.6 million as of June 30, 2025. Interest income from real estate financing investments was $3.7 million for the three months ended June 30, 2025. Balance Sheet and Financing Activity As of June 30, 2025, the Company had $1.4 billion of total debt outstanding, including $209.0 million outstanding under its revolving credit facility. Total debt outstanding excludes GAAP adjustments and deferred financing costs. As of June 30, 2025, the Company’s debt was 94% fixed or economically hedged after considering interest rate swaps. Outlook The Company maintained its 2025 full-year Normalized FFO guidance at the Company's previous guidance range of $1.00 to $1.10 per diluted share. The following table updates the Company's assumptions underpinning full year guidance. The Company's executive management will provide further details regarding its 2025 earnings guidance during tomorrow's webcast and conference call. Full-year 2025 Guidance[1][2] Expected RangesPortfolio NOI $173.6M $176.0MConstruction Segment Gross Profit $5.0M $7.0MG&A Expenses ($17.2M) ($16.4M)Interest Income $15.3M $16.3MAdjusted Interest Expense[3] ($64.7M) ($60.7M)Normalized FFO per diluted share $1.00 $1.10 [1] Ranges exclude certain items per the Company ’s Normalized FFO definition: Normalized FFO excludes certain items, including debt extinguishment losses and prepayment penalties, impairment and accelerated amortization of intangible assets and liabilities, property acquisition, development, and other pursuit costs, mark-to-market adjustments for 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. [2] Includes the following assumptions: Southern Post Commercial Stabilized 4Q25Two Real Estate Financing investments acquired in second half of 2025One Property Disposition [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 Tuesday, August 5, 2025 at 8:30 a.m. Eastern Time to review financial results and discuss recent events. The recorded webcast will be available through the Investors page of the Company’s website, ArmadaHoffler.com. To participate in the call, please dial (+1) 800 549 8228 (toll-free dial-in number) or (+1) 646 564 2877 (toll dial-in number). The conference ID is 67471. A replay of the conference call will be available through Thursday, September 4, 2025 by dialing (+1) 888 660 6264 (toll-free dial-in number) or (+1) 646 517 3975 (toll dial-in number) and providing passcode 67471#. About Armada Hoffler Properties, Inc. Armada Hoffler (NYSE: AHH) is a vertically integrated, self-managed real estate investment trust 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 their 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, 2024, and the other documents filed by the Company with the Securities and Exchange Commission 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, debt extinguishment losses and prepayment penalties, impairment and accelerated amortization of intangible assets and liabilities, property acquisition, development, and other pursuit costs, mark-to-market adjustments for 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) June 30, 2025 December 31, 2024 (Unaudited) ASSETS Real estate investments: Income producing property $2,435,640 $2,173,787 Held for development 5,683 5,683 Construction in progress 24,095 17,515 2,465,418 2,196,985 Accumulated depreciation (487,686) (451,907)Net real estate investments 1,977,732 1,745,078 Real estate investments held for sale 4,800 4,800 Cash and cash equivalents 52,111 70,642 Restricted cash 2,490 1,581 Accounts receivable, net 53,993 52,860 Notes receivable, net 139,772 132,565 Construction receivables, including retentions, net 47,135 84,624 Construction contract costs and estimated earnings in excess of billings 2,990 6 Equity method investments 47,335 158,151 Operating lease right-of-use assets 22,727 22,841 Finance lease right-of-use assets 88,262 88,986 Acquired lease intangible assets 83,492 89,739 Other assets 53,832 60,990 Total Assets 2,576,671 2,512,863 LIABILITIES AND EQUITY Indebtedness, net 1,446,820 1,295,559 Accounts payable and accrued liabilities 34,106 38,840 Construction payables, including retentions 59,377 104,495 Billings in excess of construction contract costs and estimated earnings 6,664 5,871 Operating lease liabilities 31,284 31,365 Finance lease liabilities 93,086 92,646 Other liabilities 44,543 54,418 Total Liabilities 1,715,880 1,623,194 Total Equity 860,791 889,669 Total Liabilities and Equity $2,576,671 $2,512,863 ARMADA HOFFLER PROPERTIES, INC.CONDENSED CONSOLIDATED INCOME STATEMENTS(in thousands, except per share amounts) Three Months EndedJune 30, 2025 2024 (Unaudited)Revenues Rental revenues $65,147 $63,265 General contracting and real estate services revenues 31,976 116,839 Interest income 4,140 4,632 Total revenues 101,263 184,736 Expenses Rental expenses 16,077 15,087 Real estate taxes 6,590 5,886 General contracting and real estate services expenses 30,592 112,500 Depreciation and amortization 21,752 21,183 General and administrative expenses 5,998 4,503 Acquisition, development, and other pursuit costs 286 5,528 Impairment charges — 1,494 Total expenses 81,295 166,181 Gain on real estate dispositions, net — — Operating income 19,968 18,555 Interest expense (21,271) (21,227)Equity in loss of unconsolidated real estate entities (322) — Gain (loss) on consolidation of real estate entities 6,915 — Change in fair value of derivatives and other 648 4,398 Unrealized credit loss release 209 228 Other income (expense), net 3 79 Income before taxes 6,150 2,033 Income tax benefit 567 1,246 Net income 6,717 3,279 Net loss (income) attributable to noncontrolling interests in investment entities 77 (17)Preferred stock dividends (2,887) (2,887)Net (loss) income attributable to common stockholders and OP Unitholders $3,907 $375 ARMADA HOFFLER PROPERTIES, INC.RECONCILIATION OF NET (LOSS) INCOME TO FFO & NORMALIZED FFO(in thousands, except per share amounts) Three Months EndedJune 30, 2025 2024 (Unaudited)Net (loss) income attributable to common stockholders and OP Unitholders $3,907 $375 Depreciation and amortization, net(1) 21,979 20,570 Gain on consolidation of real estate entities (6,915) — Impairment of real estate assets — 1,494 FFO attributable to common stockholders and OP Unitholders $18,971 $22,439 Acquisition, development, and other pursuit costs 286 5,528 Unrealized credit loss release (209) (228)Amortization of right-of-use assets - finance leases 395 394 Increase in fair value of derivatives not designated as cash flow hedges 3,845 1,950 Stock compensation normalization(2) 139 — Amortization of interest rate derivatives on designated cash flow hedges 383 121 Severance related costs 1,580 — Normalized FFO available to common stockholders and OP Unitholders $25,390 $30,204 Net (loss) income attributable to common stockholders and OP Unitholders per diluted share and unit $0.04 $— FFO attributable to common stockholders and OP Unitholders per diluted share and unit $0.19 $0.25 Normalized FFO attributable to common stockholders and OP Unitholders per diluted share and unit $0.25 $0.34 Weighted average common shares and units - diluted 102,286 88,815 (1) The adjustment for depreciation and amortization excludes amortization of above and below-market ground lease assets. The adjustments for depreciation and amortization for each of the three months ended June 30, 2025 and 2024 excludes $0.3 million and $0.2 million, respectively, of depreciation attributable to our partners.(2) Accounts for the double-issuance of stock compensation due to a modification in the structure of executive compensation grants, removing the impact of grants in the current year that are related to the prior year's performance. New grants are now issued in the year in which performance relates. Adjustment also removes impact of a one-time acceleration of 100% of stock compensation awarded to our former Chief Executive Officer in relation to prior year performance and the special award granted in June 2025. This adjustment accounts for the duplicate expense, but does not adjust for the double issuance of shares. ARMADA HOFFLER PROPERTIES, INC.RECONCILIATION OF NET (LOSS) INCOME TO SAME STORE NOI, CASH BASIS(in thousands) (unaudited) Three Months EndedJune 30, 2025 2024 Retail Same Store(1) Same Store NOI, Cash Basis $16,886 $17,172 GAAP Adjustments(2) 1,350 971 Same Store NOI 18,236 18,143 Non-Same Store NOI(3) 75 1,135 Segment NOI 18,311 19,278 Office Same Store(4) Same Store NOI, Cash Basis 13,202 13,051 GAAP Adjustments(2) 2,061 1,976 Same Store NOI 15,263 15,027 Non-Same Store NOI(3) 182 (247)Segment NOI 15,445 14,780 Multifamily Same Store(5) Same Store NOI, Cash Basis 7,799 7,569 GAAP Adjustments(2) 215 208 Same Store NOI 8,014 7,777 Non-Same Store NOI(3) 710 455 Segment NOI 8,724 8,232 Total Property NOI 42,480 42,290 General contracting & real estate services gross profit 1,384 4,339 Real estate financing gross profit 3,672 3,966 Interest income(6) 468 666 Depreciation and amortization (21,752) (21,183)General and administrative expenses (5,998) (4,503)Acquisition, development, and other pursuit costs (286) (5,528)Interest expense(7) (21,271) (21,227)Equity in income of unconsolidated real estate entities (322) — Gain on consolidation of real estate entities 6,915 — Change in fair value of derivatives and other 648 4,398 Unrealized credit loss release 209 228 Other income (expense), net 3 79 Income tax benefit 567 1,246 Net income 6,717 3,277 Net loss (income) attributable to noncontrolling interests in investment entities 77 (17)Preferred stock dividends (2,887) (2,887)Net income attributable to AHH and OP unitholders $3,907 $373 (1) Retail same-store portfolio for the three months ended June 30, 2025 and 2024 excludes Southern Post Retail, Allied | Harbor Point Retail, and Columbus Village II due to redevelopment, as well as Market at Mill Creek and Nexton Square which were sold in December 2024.(2) GAAP Adjustments include adjustments for the net effects of straight-line rental revenues, the amortization of lease incentives and above/below market rents, the net effects of straight-line rental expenses, and ground rent expenses for finance leases.(3) Includes expenses associated with the Company's in-house asset management division.(4) Office same-store portfolio for the three months ended June 30, 2025 and 2024 excludes Southern Post Office and Allied | Harbor Point Office Garage.(5) Multifamily same-store portfolio for the three months ended June 30, 2025 and 2024 excludes Chandler Residences and The Allied | Harbor Point.(6) Excludes real estate financing segment interest income.(7) Excludes real estate financing segment interest expense. Contact: Chelsea ForrestArmada HofflerVice President of Corporate Communications and Investor RelationsEmail: CForrest@ArmadaHoffler.comPhone: (757) 612-4248

Armada Hoffler Reports Second Quarter 2025 Results

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