Armada Hoffler Properties, Inc. [AHH] Filings

10-Q 1 ahh-20240630.htm 10-Q ahh-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35908

ARMADA HOFFLER PROPERTIES, INC.

(Exact name of registrant as specified in its charter)

Maryland

46-1214914

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

222 Central Park Avenue

Suite 2100

Virginia Beach

Virginia

23462

(Address of principal executive offices)

(Zip Code)

(757) 366-4000

(Registrant’s telephone number, including area code)

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

6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share

AHHPrA

New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		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. ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

As of August 2, 2024, the registrant had 67,872,875 shares of common stock, $0.01 par value per share, outstanding. In addition, as of August 2, 2024, Armada Hoffler, L.P., the registrant's operating partnership subsidiary, had 21,664,516 units of limited partnership interest ("OP Units") outstanding (other than OP Units held by the registrant).

Table of Content

ARMADA HOFFLER PROPERTIES, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2024

Table of Contents


		Page

Part I. Financial Information		1

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Comprehensive Income	2

	Condensed Consolidated Statements of Equity	3

	Condensed Consolidated Statements of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47

Item 4.	Controls and Procedures	47

Part II. Other Information		48

Item 1.	Legal Proceedings	48

Item 1A.	Risk Factors	48

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 3.	Defaults Upon Senior Securities	48

Item 4.	Mine Safety Disclosures	48

Item 5.	Other Information	48

Item 6.	Exhibits	49



Signatures		50

Table of Content

PART I. Financial Information

Item 1. Financial Statements

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Balance Sheets

(In thousands, except par value and share data)


	June 30, 2024		December 31, 2023
	(Unaudited)
ASSETS
Real estate investments:
Income producing property	$	2,186,764	$	2,093,032
Held for development	10,483		11,978
Construction in progress	46,642		102,277
	2,243,889		2,207,287
Accumulated depreciation	(425,166)		(393,169)
Net real estate investments	1,818,723		1,814,118

Cash and cash equivalents	20,306		27,920
Restricted cash	1,391		2,246
Accounts receivable, net	44,170		45,529
Notes receivable, net	124,178		94,172
Construction receivables, including retentions, net	106,010		126,443
Construction contract costs and estimated earnings in excess of billings	542		104
Equity method investments	152,615		142,031
Operating lease right-of-use assets	22,954		23,085
Finance lease right-of-use assets	89,776		90,565
Acquired lease intangible assets	101,418		109,137
Other assets	87,903		87,548
Total Assets	$	2,569,986	$	2,562,898
LIABILITIES AND EQUITY
Indebtedness, net	$	1,419,229	$	1,396,965

Accounts payable and accrued liabilities	39,543		31,041
Construction payables, including retentions	125,226		128,290
Billings in excess of construction contract costs and estimated earnings	19,418		21,414
Operating lease liabilities	31,442		31,528
Finance lease liabilities	92,258		91,869
Other liabilities	53,464		56,613
Total Liabilities	1,780,580		1,757,720



Stockholders’ equity:
Preferred stock, $0.01 par value, 100,000,000 shares authorized: 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, 9,980,000 shares authorized; 6,843,418 shares issued and outstanding as of June 30, 2024 and December 31, 2023	171,085		171,085
Common stock, $0.01 par value, 500,000,000 shares authorized; 67,388,397 and 66,793,294 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	674		668
Additional paid-in capital	587,117		580,687
Distributions in excess of earnings	(200,699)		(184,724)
Accumulated other comprehensive income	4,557		4,906
Total stockholders’ equity	562,734		572,622
Noncontrolling interests in investment entities	9,511		9,986
Noncontrolling interests in Operating Partnership	217,161		222,570
Total Equity	789,406		805,178
Total Liabilities and Equity	$	2,569,986	$	2,562,898

See Notes to Condensed Consolidated Financial Statements.

Table of Content

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Comprehensive Income

(In thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues
Rental revenues	$	63,265	$	59,951	$	125,146	$	116,169
General contracting and real estate services revenues	116,839		102,574		243,814		186,812
Interest income	4,632		3,414		9,258		7,133
Total revenues	184,736		165,939		378,218		310,114

Expenses
Rental expenses	15,087		13,676		29,692		26,636
Real estate taxes	5,886		5,631		11,811		11,043
General contracting and real estate services expenses	112,500		99,071		235,398		180,241
Depreciation and amortization	20,789		19,878		41,224		38,346
Amortization of right-of-use assets - finance leases	394		347		789		624
General and administrative expenses	4,503		4,052		10,377		9,500
Acquisition, development, and other pursuit costs	5,528		18		5,528		18
Impairment charges	1,494		—		1,494		102
Total expenses	166,181		142,673		336,313		266,510
Gain on real estate dispositions, net	—		511		—		511
Operating income	18,555		23,777		41,905		44,115
Interest expense	(21,227)		(13,629)		(39,202)		(25,931)


Change in fair value of derivatives and other	4,398		5,005		17,286		2,558
Unrealized credit loss release (provision)	228		(100)		145		(177)
Other income, net	79		168		158		261
Income before taxes	2,033		15,221		20,292		20,826
Income tax benefit (provision)	1,246		(336)		712		(524)
Net income	3,279		14,885		21,004		20,302
Net income attributable to noncontrolling interests:
Investment entities	(17)		(269)		(51)		(423)
Operating Partnership	(90)		(2,753)		(3,708)		(3,307)
Net income attributable to Armada Hoffler Properties, Inc.	3,172		11,863		17,245		16,572
Preferred stock dividends	(2,887)		(2,887)		(5,774)		(5,774)
Net income attributable to common stockholders	$	285	$	8,976	$	11,471	$	10,798
Net income attributable to common stockholders per share (basic and diluted)	$	0.00	$	0.13	$	0.17	$	0.16
Weighted-average common shares outstanding (basic and diluted)	67,106		67,901		66,972		67,844




Comprehensive income:
Net income	$	3,279	$	14,885	$	21,004	$	20,302
Unrealized cash flow hedge gains	984		6,806		4,538		6,380
Realized cash flow hedge gains reclassified to net income	(1,398)		(5,055)		(5,040)		(7,977)
Comprehensive income	2,865		16,636		20,502		18,705
Comprehensive (income) loss attributable to noncontrolling interests:
Investment entities	(17)		(245)		(12)		(363)
Operating Partnership	11		(3,169)		(3,595)		(2,951)
Comprehensive income attributable to Armada Hoffler Properties, Inc.	$	2,859	$	13,222	$	16,895	$	15,391

See Notes to Condensed Consolidated Financial Statements.

Table of Content

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Equity

(In thousands, except share data)

(Unaudited)



	Preferred stock		Common stock		Additional paid-in capital		Distributions in excess of earnings		Accumulated other comprehensive income		Total stockholders' equity		Noncontrolling interests in investment entities		Noncontrolling interests in Operating Partnership		Total equity
Balance, December 31, 2023	$	171,085	$	668	$	580,687	$	(184,724)	$	4,906	$	572,622	$	9,986	$	222,570	$	805,178

Net income	—		—		—		14,073		—		14,073		34		3,618		17,725
Unrealized cash flow hedge gains	—		—		—		—		2,664		2,664		29		861		3,554
Realized cash flow hedge gains reclassified to net income	—		—		—		—		(2,700)		(2,700)		(68)		(874)		(3,642)

Net proceeds from issuance of common stock	—		—		(10)		—		—		(10)		—		—		(10)


Restricted stock awards, net	—		2		1,394		—		—		1,396		—		—		1,396






Redemption of operating partnership units	—		—		(22)		—		—		(22)		—		(96)		(118)
Distributions to noncontrolling interests	—		—		—		—		—		—		(336)		—		(336)

Dividends declared on preferred stock	—		—		—		(2,887)		—		(2,887)		—		—		(2,887)
Dividends and distributions declared on common shares and units ($0.205 per share and unit)	—		—		—		(13,733)		—		(13,733)		—		(4,450)		(18,183)
Balance, March 31, 2024	$	171,085	$	670	$	582,049	$	(187,271)	$	4,870	$	571,403	$	9,645	$	221,629	$	802,677
Net income	—		—		—		3,172		—		3,172		17		90		3,279
Unrealized cash flow hedge gains	—		—		—		—		743		743		—		241		984
Realized cash flow hedge (gains) losses reclassified to net income	—		—		—		—		(1,056)		(1,056)		—		(342)		(1,398)

Net proceeds from issuance of common stock	—		4		4,259		—		—		4,263		—		—		4,263


Restricted stock awards, net	—		—		809		—		—		809		—		—		809







Distributions to noncontrolling interests	—		—		—		—		—		—		(151)		—		(151)

Dividends declared on preferred stock	—		—		—		(2,887)		—		(2,887)		—		—		(2,887)
Dividends and distributions declared on common shares and units ($0.205 per share and unit)	—		—		—		(13,713)		—		(13,713)		—		(4,457)		(18,170)
Balance, June 30, 2024	$	171,085	$	674	$	587,117	$	(200,699)	$	4,557	$	562,734	$	9,511	$	217,161	$	789,406

Table of Content


	Preferred stock		Common stock		Additional paid-in capital		Distributions in excess of earnings		Accumulated other comprehensive income		Total stockholders' equity		Noncontrolling interests in investment entities		Noncontrolling interests in Operating Partnership		Total equity
Balance, December 31, 2022	$	171,085	$	677	$	587,884	$	(126,875)	$	14,679	$	647,450	$	24,055	$	232,509	$	904,014

Net income	—		—		—		4,709		—		4,709		154		554		5,417
Unrealized cash flow hedge (losses) gains	—		—		—		—		(328)		(328)		2		(100)		(426)
Realized cash flow hedge gains reclassified to net income	—		—		—		—		(2,211)		(2,211)		(39)		(672)		(2,922)

Net proceeds from issuance of common stock	—		—		(149)		—		—		(149)		—		—		(149)


Restricted stock awards, net	—		2		977		—		—		979		—		—		979



Acquisitions of noncontrolling interest in real estate entity	—		—		—		—		—		—		(12,834)		—		(12,834)

Distribution to joint venture partner	—		—		—		—		—		—		(506)		—		(506)



Dividends declared on preferred stock	—		—		—		(2,887)		—		(2,887)		—		—		(2,887)
Dividends and distributions declared on common shares and units ($0.19 per share and unit)	—		—		—		(12,908)		—		(12,908)		—		(3,916)		(16,824)
Balance, March 31, 2023	$	171,085	$	679	$	588,712	$	(137,961)	$	12,140	$	634,655	$	10,832	$	228,375	$	873,862
Net income	—		—		—		11,863		—		11,863		269		2,753		14,885
Unrealized cash flow hedge gains	—		—		—		—		5,093		5,093		151		1,562		6,806
Realized cash flow hedge gains reclassified to net income	—		—		—		—		(3,735)		(3,735)		(174)		(1,146)		(5,055)




Restricted stock awards, net	—		—		337		—		—		337		—		—		337

Issuance of operating partnership units for acquisitions	—		—		—		—		—		—		—		12,194		12,194




Redemption of operating partnership units	—		—		(19)		—		—		(19)		—		(564)		(583)
Distributions to noncontrolling interests	—		—		—		—		—		—		(427)		—		(427)

Dividends declared on preferred stock	—		—		—		(2,887)		—		(2,887)		—		—		(2,887)
Dividends and distributions declared on common shares and units ($0.195 per share and unit)	—		—		—		(13,248)		—		(13,248)		—		(4,222)		(17,470)
Balance, June 30, 2023	$	171,085	$	679	$	589,030	$	(142,233)	$	13,498	$	632,059	$	10,651	$	238,952	$	881,662

See Notes to Condensed Consolidated Financial Statements.

Table of Content

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)(Unaudited)


	Six Months Ended June 30,
	2024		2023
OPERATING ACTIVITIES
Net income	$	21,004	$	20,302
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of buildings and tenant improvements	31,997		29,262
Amortization of leasing costs, in-place lease intangibles and below market ground rents - operating leases	9,227		9,084
Accrued straight-line rental revenue	(3,119)		(3,244)
Amortization of leasing incentives and above or below-market rents	(801)		(1,360)
Amortization of right-of-use assets - finance leases	789		624
Accrued straight-line ground rent expense	18		40
Unrealized credit loss provision (release)	(145)		177
Adjustment for uncollectible lease accounts	1,235		1,168
Noncash stock compensation	2,936		2,137
Noncash acquisition, development, and other pursuit costs	5,528		—
Impairment charges	1,494		102
Noncash interest expense	2,062		4,412

Gain on real estate dispositions, net	—		(511)
Change in fair value of derivatives and other	(4,560)		(490)
Adjustment for receipts on off-market interest rate derivatives	(13,006)		—

Changes in operating assets and liabilities:
Property assets	(1,433)		(792)
Property liabilities	(1,646)		(592)
Construction assets	21,209		(24,282)
Construction liabilities	(565)		10,969
Interest receivable	(8,344)		(6,545)
Net cash provided by operating activities	63,880		40,461
INVESTING ACTIVITIES
Development of real estate investments	(19,606)		(30,959)
Tenant and building improvements	(11,436)		(9,912)
Acquisitions of real estate investments, net of cash received	—		(8,355)
Dispositions of real estate investments, net of selling costs	—		(20)
Notes receivable issuances	(21,872)		(21,238)


Receipts on off-market interest rate derivatives	13,006		—
Leasing costs	(2,690)		(2,348)
Leasing incentives	—		(20)
Contributions to equity method investments	(10,584)		(30,388)
Net cash used for investing activities	(53,182)		(103,240)
FINANCING ACTIVITIES

Proceeds from issuance of common stock, net of issuance cost	4,253		(149)
Common shares tendered for tax withholding	(980)		(1,110)

Debt issuances, credit facility, and construction loan borrowings	164,095		229,783
Debt and credit facility repayments, including principal amortization	(143,739)		(138,953)
Debt issuance costs	(1,001)		(1,661)


Redemption of operating partnership units	(118)		(583)
Distributions to noncontrolling interests	(487)		(933)

Dividends and distributions	(41,190)		(39,383)
Net cash (used for) provided by financing activities	(19,167)		47,011
Net decrease in cash, cash equivalents, and restricted cash	(8,469)		(15,768)
Cash, cash equivalents, and restricted cash, beginning of period	30,166		51,865
Cash, cash equivalents, and restricted cash, end of period (1)	$	21,697	$	36,097

See Notes to Condensed Consolidated Financial Statements.

Table of Content

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Cash Flows (Continued)

(In thousands)(Unaudited)


	Six Months Ended June 30,
	2024		2023
Supplemental Disclosures (noncash transactions):


Increase in dividends and distributions payable	$	937	$	685
Increase (decrease) in accrued capital improvements and development costs	5,569		(2,126)


Issuance of operating partnership units for acquisitions	—		12,194


Debt assumed at fair value in conjunction with real estate purchases	—		105,584

Note receivable redeemed in conjunction with real estate purchase	—		90,232

Acquisitions of noncontrolling interests	—		12,834

Other liability satisfied in connection with a real estate disposal	—		750


Recognition of finance lease right-of-use assets	—		47,742
Recognition of finance lease liabilities	—		46,616

(1) The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the Condensed Consolidated Statements of Cash Flows (in thousands):


	June 30, 2024		June 30, 2023
Cash and cash equivalents	$	20,306	$	34,054
Restricted cash (a)	1,391		2,043
Cash, cash equivalents, and restricted cash	$	21,697	$	36,097

(a) Restricted cash represents amounts held by lenders for real estate taxes, insurance, and reserves for capital improvements.

See Notes to Condensed Consolidated Financial Statements.

Table of Content

ARMADA HOFFLER PROPERTIES, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Business of Organization

Armada Hoffler Properties, Inc. (the "Company") is a vertically integrated, self-managed real estate investment trust ("REIT") with over four decades of experience managing, building, acquiring, and developing high-quality retail, office, and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. In addition to the ownership of the Company's operating property portfolio, the Company develops and builds properties for its own account and through joint ventures between the Company and unaffiliated partners and also invests in development projects through real estate financing arrangements. The Company also provides general construction and development services to third-party clients. The Company's construction and development experience includes mid- and high-rise office buildings, retail strip malls, retail power centers, multifamily apartment communities, hotels and conference centers, single- and multi-tenant industrial, distribution, and manufacturing facilities, educational, medical, and special purpose facilities, government projects, parking garages, and mixed-use town centers.

The Company is the sole general partner of Armada Hoffler, L.P. (the "Operating Partnership") and, as of June 30, 2024, owned 75.6% of the economic interest in the Operating Partnership, of which 0.1% is held as general partnership units. The operations of the Company are conducted primarily through the Operating Partnership and the wholly owned subsidiaries thereof.

As of June 30, 2024, the Company's stabilized operating portfolio consisted of the following properties:


Property	Location	Ownership Interest
Retail
Town Center of Virginia Beach
249 Central Park Retail*	Virginia Beach, Virginia	100	%
4525 Main Street Retail* (1)	Virginia Beach, Virginia	100	%
4621 Columbus Retail* (2)	Virginia Beach, Virginia	100	%
Columbus Village*	Virginia Beach, Virginia	100	%
Commerce Street Retail*	Virginia Beach, Virginia	100	%
Fountain Plaza Retail*	Virginia Beach, Virginia	100	%
Pembroke Square*	Virginia Beach, Virginia	100	%
Premier Retail*	Virginia Beach, Virginia	100	%
South Retail*	Virginia Beach, Virginia	100	%
Studio 56 Retail*	Virginia Beach, Virginia	100	%
The Cosmopolitan Retail* (3)	Virginia Beach, Virginia	100	%
Two Columbus Retail* (1)	Virginia Beach, Virginia	100	%
West Retail* (1)	Virginia Beach, Virginia	100	%
Grocery Anchored
Broad Creek Shopping Center	Norfolk, Virginia	100	%
Broadmoor Plaza	South Bend, Indiana	100	%
Brooks Crossing Retail*	Newport News, Virginia	65	%	(4)
Delray Beach Plaza*	Delray Beach, Florida	100	%
Greenbrier Square	Chesapeake, Virginia	100	%
Greentree Shopping Center	Chesapeake, Virginia	100	%
Hanbury Village	Chesapeake, Virginia	100	%
Lexington Square	Lexington, South Carolina	100	%
Market at Mill Creek	Mount Pleasant, South Carolina	100	%
North Pointe Center	Durham, North Carolina	100	%

Table of Content


Parkway Centre	Moultrie, Georgia	100	%
Parkway Marketplace	Virginia Beach, Virginia	100	%
Perry Hall Marketplace	Perry Hall, Maryland	100	%
Sandbridge Commons	Virginia Beach, Virginia	100	%
Tyre Neck Harris Teeter	Portsmouth, Virginia	100	%
Harbor Point - Baltimore Waterfront
Constellation Retail* (1)	Baltimore, Maryland	90	%
Point Street Retail* (3)	Baltimore, Maryland	100	%
Southeast Sunbelt
Chronicle Mill Retail* (3)	Belmont, North Carolina	85	%	(4)
Nexton Square*	Summerville, South Carolina	100	%
North Hampton Market	Taylors, South Carolina	100	%
One City Center Retail* (1)	Durham, North Carolina	100	%
Overlook Village	Asheville, North Carolina	100	%
Patterson Place	Durham, North Carolina	100	%
Providence Plaza Retail*	Charlotte, North Carolina	100	%
South Square	Durham, North Carolina	100	%
The Interlock Retail*	Atlanta, Georgia	100	%
Wendover Village	Greensboro, North Carolina	100	%
Mid-Atlantic
Dimmock Square	Colonial Heights, Virginia	100	%
Harrisonburg Regal	Harrisonburg, Virginia	100	%
Liberty Retail* (3)	Newport News, Virginia	100	%
Marketplace at Hilltop	Virginia Beach, Virginia	100	%
Red Mill Commons	Virginia Beach, Virginia	100	%
Southgate Square	Colonial Heights, Virginia	100	%
Southshore Shops	Chesterfield, Virginia	100	%
The Edison Retail* (3)	Richmond, Virginia	100	%

Office
Town Center of Virginia Beach
249 Central Park Office* (5)	Virginia Beach, Virginia	100	%
4525 Main Street*	Virginia Beach, Virginia	100	%
4605 Columbus Office* (5)	Virginia Beach, Virginia	100	%
Armada Hoffler Tower*	Virginia Beach, Virginia	100	%
One Columbus*	Virginia Beach, Virginia	100	%
Two Columbus Office*	Virginia Beach, Virginia	100	%
Harbor Point - Baltimore Waterfront
Constellation Office*	Baltimore, Maryland	90	%
Thames Street Wharf*	Baltimore, Maryland	100	%
Wills Wharf*	Baltimore, Maryland	100	%
Southeast Sunbelt
Chronicle Mill Office* (3)	Belmont, North Carolina	85	%	(4)
One City Center Office*	Durham, North Carolina	100	%
Providence Plaza Office* (5)	Charlotte, North Carolina	100	%
The Interlock Office*	Atlanta, Georgia	100	%
Mid-Atlantic

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Brooks Crossing Office* (5)	Newport News, Virginia	100	%

Multifamily
Town Center of Virginia Beach
Encore Apartments*	Virginia Beach, Virginia	100	%
Premier Apartments*	Virginia Beach, Virginia	100	%
The Cosmopolitan*	Virginia Beach, Virginia	100	%
Harbor Point - Baltimore Waterfront
1305 Dock Street*	Baltimore, Maryland	90	%
1405 Point*	Baltimore, Maryland	100	%
Southeast Sunbelt
Chronicle Mill*	Belmont, North Carolina	85	%	(4)
Greenside Apartments	Charlotte, North Carolina	100	%
The Everly*	Gainesville, Georgia	100	%
Mid-Atlantic
The Edison*	Richmond, Virginia	100	%
Liberty Apartments*	Newport News, Virginia	100	%
Smith's Landing	Blacksburg, Virginia	100	%

________________________________________

*Mixed-use asset.

(1) Formerly reported in the office real estate segment. Refer to Note 3 for further information.

(2) Formerly known as Apex Entertainment.

(3) Formerly reported in the multifamily real estate segment. Refer to Note 3 for further information.

(4) We are entitled to a preferred return on our investment in this property.

(5) Formerly reported in the retail real estate segment. Refer to Note 3 for further information.

As of June 30, 2024, the following properties were under development or redevelopment:

Development, Not Stabilized

Segment

Location

AHH Ownership

Southern Post Retail*

Retail

Roswell, Georgia

100%

Southern Post Office*

Office

Roswell, Georgia

100%

Chandler Residences*

Multifamily

Roswell, Georgia

100%

Redevelopment

Segment

Location

AHH Ownership

Columbus Village II*

Retail

Virginia Beach, Virginia

100

________________________________________

*Mixed-use asset.

2. Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles ("GAAP").

The condensed consolidated financial statements include the financial position and results of operations of the Company and its subsidiaries. The Company’s subsidiaries include the Operating Partnership and the subsidiaries that are wholly owned or in which the Company has a controlling interest, including where the Company has been determined to be a primary beneficiary of a variable interest entity ("VIE") in accordance with the consolidation guidance of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"). All significant intercompany transactions and balances have been eliminated in consolidation.

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In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for the fair presentation of the financial condition, and results of operations for the interim periods presented.

The accompanying condensed consolidated financial statements were prepared in accordance with the requirements for interim financial information. Accordingly, these interim financial statements have not been audited and exclude certain disclosures required for annual financial statements. Also, the operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These interim financial statements should be read in conjunction with the audited consolidated financial statements of the Company included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed. Such estimates are based on management’s historical experience and best judgment after considering past, current, and expected events and economic conditions. Actual results could differ significantly from management’s estimates.

Recent Accounting Pronouncements

Recently Issued Accounting Standards Not Yet Adopted:

Segment Reporting

In November 2023, the FASB issued ASU 2023-07 as an update to ASC Topic 280, which will be effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. Early adoption is permitted. ASU 2023-07 requires an entity to disclose significant segment expenses regularly provided to the chief operating decision maker, a description of "other segment items," and the title and position of the chief operating decision maker, and allows for more than one measure of a segment's profit or loss if used by the chief operating decision maker. The update also enhances interim disclosure requirements and requirements for entities with a single reportable segment. The Company is currently evaluating the impact of ASU 2023-07 on its consolidated financial statements.

Income Taxes

In December 2023, the FASB issued ASU 2023-09 as an update to ASC Topic 740, which will become effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. ASU 2023-09 enhances the disclosures surrounding income taxes, specifically in relation to the rate reconciliation table and income taxes paid. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements.

Other Accounting Policies

See the Company's Annual Report on Form 10-K for the year ended December 31, 2023 for a description of other accounting principles upon which basis the accompanying consolidated financial statements were prepared.

3. Segments

The Company operates its business in five reportable segments: (i) retail real estate, (ii) office real estate, (iii) multifamily real estate, (iv) general contracting and real estate services, and (v) real estate financing. Refer to Note 1 for the composition of properties within each property segment.

Net operating income ("NOI") is the primary measure used by the Company’s chief operating decision-maker to assess segment performance. NOI is calculated as segment revenues less segment expenses. Segment revenues include rental revenues for the property segments, general contracting and real estate services revenues for the general contracting and real estate services segment, and interest income for the real estate financing segment. Segment expenses include rental expenses and real estate taxes for the property segments, general contracting and real estate services expenses for the general contracting and real estate services segment, and interest expense for the 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 as illustrated in the table below. NOI is not a measure of operating income or cash flows from operating

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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. 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, construction, and real estate financing businesses.

Since the Company's Annual Report on Form 10-K for the year ended December 31, 2023, the Company retrospectively reclassified certain components of mixed-use properties between the retail, office, and multifamily real estate segments in order to align the components of those properties with their tenant composition. As a result, NOI for the three months ended June 30, 2023 increased $0.5 million and less than $0.1 million for the retail and office real estate segments, respectively, and decreased $0.5 million for the multifamily real estate segment. NOI for the six months ended June 30, 2023 increased $0.8 million and less than $0.1 million for the retail and office real estate segments, respectively, and decreased $0.9 million for the multifamily real estate segment. These reclassifications had no effect on total property NOI as previously reported. These reclassifications also had no impact on our general contracting and real estate services or real estate financing segments.

The following table presents NOI for the Company's five reportable segments for the three and six months ended June 30, 2024 and 2023 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Retail real estate
Rental revenues	$	26,094	$	25,288	$	51,745	$	48,247
Rental expenses	4,394		4,073		8,605		7,717
Real estate taxes	2,420		2,340		4,835		4,608

Armada Hoffler Properties, Inc. [AHH] Filings

Armada Hoffler Properties, Inc. [AHH-PA] Filings