VIRGINIA BEACH, Va., May 09, 2024 (GLOBE NEWSWIRE) — Armada Hoffler Properties, Inc. (NYSE: AHH) today announced its results for the quarter ended March 31, 2024 and provided an update on current events and earnings guidance.
First Quarter and Recent Highlights:
- Net income attributable to common stockholders and OP Unit holders of $14.8 million, or $0.17 per diluted share, compared to $2.4 million, or $0.03 per diluted share, for the three months ended March 31, 2023.
- Funds from operations attributable to common stockholders and OP Unit holders (“FFO”) of $35.0 million, or $0.40 per diluted share, compared to $20.6 million, or $0.23 per diluted share, for the three months ended March 31, 2023. See “Non-GAAP Financial Measures.”
- Normalized funds from operations attributable to common stockholders and OP Unit holders (“Normalized FFO”) of $29.4 million, or $0.33 per diluted share, compared to $26.5 million, or $0.30 per diluted share, for the three months ended March 31, 2023. See “Non-GAAP Financial Measures.”
- Maintained the Company’s previous guidance range for 2024 full-year Normalized FFO of $1.21 to $1.27 per diluted share.
- As of March 31, 2024, weighted average portfolio occupancy was 94.7%. Retail occupancy was 95.4%, office occupancy was 93.6%, and multifamily occupancy was 95.1%.
- First quarter commercial lease renewal spreads increased 11.5% on a GAAP basis and 3.7% on a cash basis.
- Executed 21 lease renewals and 3 new leases during the first quarter for an aggregate of 115,549 of net rentable square feet.
“We continue to see our portfolio produce robust operating metrics, above our peer set, maintaining confidence in our guidance,” said Louis Haddad, Chief Executive Officer. “Our strong start to 2024 is highlighted by our 95% portfolio occupancy, positive releasing spreads, and ongoing focus on strategic capital allocation. Demand remains strong for our premier locations and mixed-use projects that are the preferred destination for today’s consumers, tenants, office workers, and corporate leaders envisioning the future success of their enterprises.”
- Same Store NOI increased 0.4% on a GAAP basis and 0.8% on a cash basis compared to the quarter ended March 31, 2023.
- Third-party construction backlog as of March 31, 2024 was $343.4 million and construction gross profit for the first quarter was $4.1 million.
- Announced the appointment of F. Blair Wimbush to the Company’s Board of Directors.
- During the first quarter of 2024, unrealized gains on non-designated interest rate derivatives that positively affected FFO were $6.5 million. As of March 31, 2024, the value of the Company’s entire interest rate derivative portfolio, net of unrealized gains, was $35.0 million. These gains are excluded from normalized FFO.
Financial Results
Net income attributable to common stockholders and OP Unit holders for the first quarter increased to $14.8 million compared to $2.4 million for the first quarter of 2023. The period-over-period change was primarily due to an increase in property net operating income, primarily as a result of acquisitions and positive releasing spreads, as well as higher general contracting gross profit, higher interest income, and unrealized gains on derivatives not designated as cash flow hedges.
FFO attributable to common stockholders and OP Unit holders for the first quarter increased to $35.0 million compared to $20.6 million for the first quarter of 2023. Normalized FFO attributable to common stockholders and OP Unit holders for the first quarter increased to $29.4 million compared to $26.5 million for the first quarter of 2023. The period-over-period increases in FFO and Normalized FFO were due to an increase in property net operating income primarily as a result of acquisitions and positive releasing spreads, as well as higher general contracting gross profit and higher interest income.
Operating Performance
At the end of the first quarter, the Company’s retail, office, and multifamily stabilized operating property portfolios were 95.4%, 93.6%, and 95.1% occupied, respectively.
Total construction contract backlog was $343.4 million as of March 31, 2024.
Interest income from real estate financing investments was $4.0 million for the three months ended March 31, 2024.
Balance Sheet and Financing Activity
As of March 31, 2024, the Company had $1.4 billion of total debt outstanding, including $289 million outstanding under its revolving credit facility. Total debt outstanding excludes GAAP adjustments and deferred financing costs. Approximately 89% of the Company’s debt had fixed interest rates or was subject to interest rate swaps as of March 31, 2024. The Company’s debt was 94% fixed or economically hedged as of March 31, 2024 after considering interest rate caps.
Outlook
The Company maintained its 2024 full-year Normalized FFO guidance range at the Company’s previous guidance range of $1.21 to $1.27 per diluted share. The following table updates the Company’s assumptions underpinning its full-year guidance. The Company’s executive management will provide further details regarding its 2024 earnings guidance during today’s webcast and conference call.
| Full-year 2024 Guidance [1][2] | Expected Ranges | |||||
| Portfolio NOI | $166.6M | $171.0M | ||||
| Construction Segment Gross Profit | $12.8M | $14.3M | ||||
| G&A Expenses | $18.8M | $18.2M | ||||
| Interest Income | $17.3M | $17.9M | ||||
| Adjusted Interest Expense[3] | $59.4M | $58.8M | ||||
| Normalized FFO per diluted share | $1.21 | $1.27 | ||||
[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, 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:
- No material capital market activity in FY24
- Asset disposition in 4Q24
- Southern Post delivery schedule updated
- Anticipated realization of a real estate financing investment in FY24
[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.
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.
