FORWARD-LOOKING STATEMENTS
This Supplemental Financial Package should be read in conjunction with the unaudited condensed consolidated financial statements appearing in our press release dated November 2, 2023, which has been furnished as Exhibit 99.1 to our Form 8-K furnished on November 2, 2023. 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")), and, as such, may involve known and unknown risks and 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. 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's actual future results and trends may differ materially from expectations depending on a variety of fac tors discussed in the Company's filings with 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 cha nge in events,
conditions or circumstances on which any such statement is based, except to the extent otherwise required by applicable law.
2
CORPORATE PROFILE
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.
BOARD OF DIRECTORS | CORPORATE OFFICERS | ||
Daniel A. Hoffler, Executive Chairman of the Board | Louis S. Haddad, President and Chief Executive Officer | ||
Louis S. Haddad, Vice Chairman of the Board | Shawn J. Tibbetts, Chief Operating Officer | ||
Eva S. Hardy, Lead Independent Director | Matthew T. Barnes-Smith, Chief Financial Officer | ||
George F. Allen, Independent Director | Eric E. Apperson, President of Construction | ||
James A. Carroll, Independent Director | Shelly R. Hampton, President of Asset Management | ||
James C. Cherry, Independent Director | |||
Dennis H. Gartman, Independent Director | CREDIT RATING | ||
A. Russell Kirk, Director | |||
John W. Snow, Independent Director | Rating: BBB | ||
Agency: DBRS Morningstar | |||
ANALYST COVERAGE | |||
Bank of America Merrill Lynch | Jefferies | Robert W. Baird & Co. | |
Camille Bonnel | Peter Abramowitz | Wesley Golladay | |
(416) 369-2140 | (212) 336-7241 | (216) 737-7510 | |
camille.bonnel@bofa.com | pabramowitz@jefferies.com | wgolladay@rwbaird.com | |
Janney, Montgomery, & Scott LLC | Raymond James & Associates | Stifel | |
Robert Stevenson | Bill Crow | Stephen Manaker | |
(646) 840-3217 | (727) 567-2594 | (212) 271-3716 | |
robertstevenson@janney.com | bill.crow@raymondjames.com | manakers@stifel.com | |
HIGHLIGHTS
- Net income attributable to common stockholders and OP Unit holders of $5.3 million, or $0.06 per diluted share, compared to $33.9 million, or $0.38 per diluted share, for the three months ended September 30, 2022.
- Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of $27.6 million, or $0.31 per diluted share, compared to $22.7 million, or $0.26 per diluted share, for the three months ended September30, 2022. See "Non-GAAP Financial Measures."
- Normalized funds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $27.7 million, or $0.31 per diluted share, compared to $25.8 million, or $0.29 per diluted share, for the three months ended September 30, 2022.
- Maintained the Company's previous guidance range for 2023 full-year Normalized FFO of $1.23 to $1.27 per diluted share.
- Maintained a 97% weighted average portfolio occupancy as of September 30, 2023. Retail occupancy was 98%, office occupancy was 96%, and multifamily occupancy was 96%.
- Third quarter commercial lease renewal spreads increased 14.5% on a GAAP basis and 4.9% on a cash basis.
- Same Store NOI increased 4.4% on a GAAP basis and 5.9% on a cash basis compared to the quarter ended September30, 2022:
- Retail Same Store NOI increased 6.6% on a GAAP basis and 6.4% on a cash basis.
- Office Same Store NOI increased 2.3% on a GAAP basis and 8.1% on a cash basis.
- Multifamily Same Store NOI increased 3.1% on a GAAP basis and 2.2% on a cash basis.
- Third-partyconstruction backlog as of September 30, 2023 was $513.6 million and construction gross profit for the third quarter was $3.3 million.
4
2023 OUTLOOK
OUTLOOK(1) | LOW | HIGH |
PORTFOLIO NOI | $161.1M | $161.9M |
CONSTRUCTION SEGMENT PROFIT | $11.8M | $12.8M |
G&A EXPENSES | $17.8M | $18.4M |
INTEREST INCOME | $14.5M | $14.9M |
INTEREST EXPENSE(2) | $47.2M | $47.8M |
NORMALIZED FFO PER DILUTED SHARE | $1.23 | $1.27 |
- See appendix for definitions. Ranges exclude certain items as per definition.
- Includes the interest expense on finance leases and interest receipts of non -designated derivatives.
5
SUMMARY INFORMATION
$ IN THOUSANDS, EXCEPT PER SHARE
Three Months Ended | ||||||||||
OPERATIONAL METRICS | 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | ||||||
Net Income Attributable to Common Stockholders and OP Unitholders | $5,343 | $11,729 | $2,376 | $11,517 | ||||||
Net Income per Diluted Share Attributable to Common Stockholders and OP Unitholders | $0.06 | $0.13 | $0.03 | $0.13 | ||||||
Normalized FFO Attributable to Common Stockholders and OP Unitholders | 27,735 | 28,301 | 26,498 | 30,633 | ||||||
Normalized FFO per Diluted Share Attributable to Common Stockholders and OP Unitholders | $0.31 | $0.32 | $0.30 | $0.35 | ||||||
Stabilized Portfolio Debt / Stabilized Portfolio Adjusted EBITDA | 6.2x | 5.5x | 5.4x | 5.3x | ||||||
Fixed Charge Coverage Ratio | 2.2x | 2.3x | 2.3x | 2.6x | ||||||
CAPITALIZATION | ||||||||||
Common Shares Outstanding | 67,885 | 67,945 | 67,939 | 67,730 | ||||||
Operating Partnership Units Outstanding | 21,643 | 21,653 | 20,611 | 20,611 | ||||||
Common Shares and Operating Partnership Units Outstanding | 89,528 | 89,598 | 88,550 | 88,341 | ||||||
Market Price per Common Share as of Last Day of Quarter | $10.24 | $11.68 | $11.81 | $11.49 | ||||||
Common Equity Capitalization | 916,766 | 1,046,505 | 1,045,776 | 1,015,038 | ||||||
Preferred Equity Capitalization | 171,085 | 171,085 | 171,085 | 171,085 | ||||||
Total Equity Capitalization | 1,087,851 | 1,217,590 | 1,216,861 | 1,186,123 | ||||||
Total Debt(1) | 1,326,987 | 1,269,586 | 1,117,424 | 1,073,132 | ||||||
Total Capitalization | $2,414,838 | $2,487,176 | $2,334,285 | $2,259,255 | ||||||
STABILIZED PORTFOLIO OCCUPANCY(2) | ||||||||||
Retail | 98.1% | 98.2% | 98.4% | 97.9% | ||||||
Office | 96.1% | 96.2% | 96.8% | 96.7% | ||||||
Multifamily | 96.0% | 96.2% | 95.7% | 96.1% | ||||||
Weighted Average(3) | 96.8% | 97.0% | 97.1% | 97.0% | ||||||
STABILIZED PORTFOLIO | ||||||||||
Commercial | ||||||||||
Retail Portfolio | ||||||||||
Net Operating Income | $19,249 | $18,412 | $16,667 | $16,474 | ||||||
Number of Properties | 38 | 39 | 38 | 38 | ||||||
Net Rentable Square Feet | 3,931,079 | 4,023,183 | 3,915,809 | 3,916,001 | ||||||
Office Portfolio | ||||||||||
Net Operating Income | $13,890 | $13,084 | $12,376 | $12,888 | ||||||
Number of Properties | 10 | 10 | 9 | 9 | ||||||
Net Rentable Square Feet | 2,310,645 | 2,310,645 | 2,111,924 | 2,111,923 | ||||||
Multifamily | ||||||||||
Multifamily Portfolio | ||||||||||
Net Operating Income | $8,979 | $9,148 | $8,167 | $8,327 | ||||||
Number of Properties | 11 | 11 | 10 | 10 | ||||||
Units | 2,492 | 2,492 | 2,254 | 2,254 | ||||||
(1) | Excludes GAAP adjustments. | 6 | ||||||||
(2) | See appendix for definitions. |
(3) Total occupancy weighted by annualized base rent.
SUMMARY INCOME STATEMENT
$ IN THOUSANDS, EXCEPT PER SHARE
Three Months Ended | Nine Months Ended | |||||||
9/30/2023 | 9/30/2022 | 9/30/2023 | 9/30/2022 | |||||
Revenues | (Unaudited) | |||||||
Rental Revenues | $62,913 | $53,743 | $179,082 | $163,602 | ||||
General Contracting and Real Estate Services Revenues | 99,408 | 69,024 | 286,220 | 138,947 | ||||
Interest Income | 3,690 | 3,490 | 10,823 | 10,410 | ||||
Total Revenues | 166,011 | 126,257 | 476,125 | 312,959 | ||||
Expenses | ||||||||
Rental Expenses | 14,756 | 12,747 | 41,392 | 38,101 | ||||
Real Estate Taxes | 5,867 | 5,454 | 16,910 | 16,695 | ||||
General Contracting and Real Estate Services Expenses | 96,095 | 66,252 | 276,336 | 133,491 | ||||
Depreciation and Amortization | 22,462 | 17,527 | 60,808 | 54,865 | ||||
Amortization of Right-of-Use Assets - Finance Leases | 425 | 278 | 1,049 | 833 | ||||
General & Administrative Expenses | 4,286 | 3,854 | 13,786 | 12,179 | ||||
Acquisition, Development & Other Pursuit Costs | - | - | 18 | 37 | ||||
Impairment Charges | 5 | - | 107 | 333 | ||||
Total Expenses | 143,896 | 106,112 | 410,406 | 256,534 | ||||
Gain on Real Estate Dispositions | 227 | 33,931 | 738 | 53,424 | ||||
Operating Income | 22,342 | 54,076 | 66,457 | 109,849 | ||||
Interest Expense | (15,444) | (10,345) | (41,375) | (28,747) | ||||
Loss on Extinguishment of Debt | - | (2,123) | - | (2,899) | ||||
Change in Fair Value of Derivatives and Other | 2,466 | 782 | 5,024 | 7,512 | ||||
Unrealized Credit Loss (Provision) Release | (694) | 42 | (871) | (858) | ||||
Other Income (Expense), Net | 63 | 118 | 324 | 415 | ||||
Income Before Taxes | 8,733 | 42,550 | 29,559 | 85,272 | ||||
Income Tax (Provision) Benefit | (310) | (181) | (834) | 140 | ||||
Net Income | $8,423 | $42,369 | $28,725 | $85,412 | ||||
Net Income Attributable to Noncontrolling Interest in Investment Entities | (193) | (5,583) | (616) | (5,811) | ||||
Preferred Stock Dividends | (2,887) | (2,887) | (8,661) | (8,661) | ||||
Net Income Attributable to AHH and OP Unitholders | $5,343 | $33,899 | $19,448 | $70,940 | ||||
Net Income per Diluted Share and Unit Attributable to AHH and OP Unitholders | ||||||||
$0.06 | $0.38 | $0.22 | $0.80 | |||||
Weighted Average Shares & OP Units - Diluted | 89,589 | 88,341 | 88,908 | 88,143 |
7
SUMMARY BALANCE SHEET
$ IN THOUSANDS
As Of | ||||
9/30/2023 | 12/31/2022 | |||
Assets | (Unaudited) | |||
Real Estate Investments: | ||||
Income Producing Property | $2,089,170 | $1,884,214 | ||
Held for Development | 6,294 | 6,294 | ||
Construction in Progress | 91,127 | 53,067 | ||
Accumulated Depreciation | (376,449) | (329,963) | ||
Net Real Estate Investments | 1,810,142 | 1,613,612 | ||
Cash and Cash Equivalents | 32,662 | 48,139 | ||
Restricted Cash | 2,343 | 3,726 | ||
Accounts Receivable, Net | 43,800 | 39,186 | ||
Notes Receivable, Net | 83,713 | 136,039 | ||
Construction Receivables, Including Retentions, Net | 87,295 | 70,822 | ||
Construction Contract Costs and Estimated Earnings in Excess of Billings | 440 | 342 | ||
Equity Method Investments | 125,672 | 71,983 | ||
Operating Lease Right-of-Use Assets | 23,152 | 23,350 | ||
Finance Lease Right-of-Use Assets | 92,570 | 45,878 | ||
Acquired Lease Intangible Assets | 127,020 | 103,870 | ||
Other Assets | 104,275 | 85,363 | ||
Total Assets | $2,533,084 | $2,242,310 | ||
Liabilities and Equity | ||||
Indebtedness, Net | $1,321,792 | $1,068,261 | ||
Accounts Payable and Accrued Liabilities | 31,604 | 26,839 | ||
Construction Payables, Including Retentions | 108,107 | 93,472 | ||
Billings in Excess of Construction Contract Costs and Est. Earnings | 23,127 | 17,515 | ||
Operating Lease Liabilities | 31,573 | 31,677 | ||
Finance Lease Liabilities | 93,419 | 46,477 | ||
Other Liabilities | 56,818 | 54,055 | ||
Total Liabilities | 1,666,440 | 1,338,296 | ||
Total Equity | 866,644 | 904,014 | ||
Total Liabilities and Equity | $2,533,084 | $2,242,310 | ||
8
FFO, NORMALIZED FFO & AFFO(1)
$ IN THOUSANDS, EXCEPT PER SHARE
Three Months Ended (Unaudited) | Nine Months Ended (Unaudited) | |||||||||
9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2023 | 9/30/2022 | |||||
Funds From Operations | ||||||||||
Net Income Attributable to AHH and OP Unitholders | $5,343 | $11,729 | $2,376 | $11,517 | $19,448 | $70,940 | ||||
Net Income per Diluted Share | $0.06 | $0.13 | $0.03 | $0.13 | $0.22 | $0.80 | ||||
Depreciation and Amortization | (2) | 22,239 | 19,655 | 18,245 | 17,887 | 60,139 | 54,084 | |||
Loss (Gain) on Dispositions of Operating Real Estate | (3) | - | - | - | 11 | - | (47,995) | |||
Impairment of Real Estate Assets | - | - | - | - | - | 201 | ||||
FFO | $27,582 | $31,384 | $20,621 | $29,415 | $79,587 | $77,230 | ||||
FFO per Diluted Share | $0.31 | $0.35 | $0.23 | $0.33 | $0.90 | $0.88 | ||||
Normalized FFO | ||||||||||
Acquisition, Development & Other Pursuit Costs | - | 18 | - | - | 18 | 37 | ||||
Loss on Extinguishment of Debt | - | - | - | 475 | - | 2,899 | ||||
Non-Cash GAAP Adjustments | 1,124 | (275) | 456 | 128 | 1,305 | 1,823 | ||||
Decrease (Increase) in Fair Value of Derivatives | (1,484) | (4,297) | 3,807 | (1,186) | (1,974) | (7,512) | ||||
Amortization of Interest Rate Derivatives on Designated Cash Flow Hedges | 513 | 1,471 | 1,614 | 1,801 | 3,598 | 2,048 | ||||
Normalized FFO | $27,735 | $28,301 | $26,498 | $30,633 | $82,534 | $76,525 | ||||
Normalized FFO per Diluted Share | $0.31 | $0.32 | $0.30 | $0.35 | $0.93 | $0.87 | ||||
Adjusted FFO | ||||||||||
Non-Cash Stock Compensation | 817 | 288 | 1,846 | 562 | 2,951 | 2,729 | ||||
Acquisition, Development & Other Pursuit Costs | - | (18) | - | - | (18) | (37) | ||||
Tenant Improvements, Leasing Commissions, Lease Incentives | (4) | (2,249) | (2,725) | (3,460) | (1,875) | (8,434) | (4,754) | |||
Property-Related Capital Expenditures | (2,678) | (1,700) | (3,724) | (3,441) | (8,102) | (8,448) | ||||
Adjustment for Real Estate Financing Modification and Exit Fees | - | (250) | (209) | (209) | (459) | (911) | ||||
Non-Cash Interest Expense | (5) | 1,917 | 1,492 | 1,292 | 1,312 | 4,701 | 4,240 | |||
Cash Ground Rent Payment - Finance Lease | (993) | (822) | (668) | (653) | (2,483) | (1,905) | ||||
GAAP Adjustments | (1,843) | (2,008) | (1,459) | (1,718) | (5,310) | (4,874) | ||||
AFFO | $22,706 | $22,558 | $20,116 | $24,611 | $65,380 | $62,565 | ||||
AFFO per Diluted Share | $0.25 | $0.25 | $0.23 | $0.28 | $0.74 | $0.71 | ||||
Weighted Average Common Shares Outstanding | 67,945 | 67,901 | 67,787 | 67,730 | 67,878 | 67,525 | ||||
Weighted Average Operating Partnership Units Outstanding | 21,644 | 20,823 | 20,611 | 20,611 | 21,030 | 20,618 | ||||
Total Weighted Average Common Shares and OP Units Outstanding | 89,589 | 88,724 | 88,398 | 88,341 | 88,908 | 88,143 |
(1) | See definitions in appendix. | |
(2) | Adjusted for the depreciation attributable to noncontrolling interests in consolidated investments. | 9 |
(3) | Excludes gain/loss attributable to noncontrolling interests in consolidated investments and the disposition of non -operating parcels. | |
(4) | Excludes development, redevelopment, and first-generation space. |
(5) Includes non-cash interest expense relating to indebtedness and interest expense on finance leases.
NET ASSET VALUE COMPONENT DATA
$ AND SHARES/UNITS IN THOUSANDS
Stabilized Portfolio NOI (Cash) | Liabilities | (5) | ||||||||||||||
Three months ended 9/30/2023 | As of 9/30/2023 | |||||||||||||||
Retail | Office | (3) | Multifamily | Total | Mortgages and Notes Payable | (6) | $1,326,987 | |||||||||
Stable Portfolio | Accounts Payable and Accrued Liabilities | 31,604 | ||||||||||||||
Portfolio NOI | (1)(2) | $18,534 | $13,356 | $8,890 | $40,780 | Construction Payables, Including Retentions | 108,107 | |||||||||
Non-Stabilized Properties NOI | (172) | - | - | (172) | Other Liabilities | (6) | 78,956 | |||||||||
Signed Leases Not Yet Occupied or in Free Rent Period | 466 | 920 | 84 | 1,470 | Total Liabilities | $1,545,654 | ||||||||||
Stable Portfolio NOI | $18,828 | $14,276 | $8,974 | $42,078 | ||||||||||||
Intra-Quarter Transactions | Preferred Equity | |||||||||||||||
Net Acquisitions | - | - | - | - | Liquidation Value | |||||||||||
Net Dispositions | - | - | - | - | Series A Cumulative Redeemable Perpetual Preferred Stock | $171,085 | ||||||||||
Annualized | $75,311 | $57,104 | $35,896 | $168,311 | ||||||||||||
(4) | ||||||||||||||||
Non-Stabilized Portfolio | ||||||||||||||||
As of 9/30/2023 | ||||||||||||||||
Projects Under Development | $67,600 | |||||||||||||||
Properties in Lease Up | - | |||||||||||||||
Development Opportunities | 17,300 | |||||||||||||||
Unconsolidated JV Development | 128,100 | |||||||||||||||
Total Non-Stabilized Portfolio | $213,000 | |||||||||||||||
Third-Party General Contracting and Real Estate Services | ||||||||||||||||
Trailing 12 Months | ||||||||||||||||
General Contracting Gross Profit | $12,129 | |||||||||||||||
Non-Property Assets | (5) | Common Equity | ||||||||||||||
As of 9/30/2023 | As of 9/30/2023 | |||||||||||||||
Cash and Restricted Cash | $35,005 | Total Common Shares Outstanding | 67,885 | |||||||||||||
Accounts Receivable, Net | 43,800 | Total OP Units Outstanding | 21,643 | |||||||||||||
Notes Receivable and Other Notes Receivable | (6) | 12,725 | Total Common Shares & OP Units Outstanding | 89,528 | ||||||||||||
Real Estate Financing Investments | (6) | 72,632 | ||||||||||||||
Construction Receivables, Including Retentions | (6) | 87,478 | ||||||||||||||
Acquired Lease Intangible Assets | 127,020 | |||||||||||||||
Other Assets / Costs in Excess of Earnings | 104,715 | |||||||||||||||
Total Non-Property Assets | $483,375 |
(1) | Excludes expenses associated with the Company's in-house asset management division of $0.8M for the 3 months ended 9/30/2023. | |
(2) | Includes 100% of joint ventures. | |
(3) | Includes leases for spaces occupied by the Company which are eliminated for GAAP purposes. | 10 |
(4) | Representative of costs incurred. | |
(5) | Excludes lease right-of-use assets and lease liabilities. |
(6) Excludes GAAP adjustments.
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Armada Hoffler Properties Inc. published this content on 02 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 November 2023 10:30:39 UTC.