Armada Hoffler Properties, Inc. (NYSE: AHH), a full service real estate
company, which develops and owns high-quality office, retail and
multifamily properties in key Mid-Atlantic markets, today announced its
results for the quarter ended December 31, 2013.
Highlights include:
-
Core Funds From Operations (“Core FFO”) of $7.1 million, or $0.22 per
diluted share.
-
New and renewal leases executed during the quarter totaling
approximately 105,000 square feet in the office and retail property
portfolios.
-
Average occupancy increased to 94.4%, compared to 93.3% in the third
quarter of 2013, across the operating property portfolio.
-
Seven properties under development including 513,000 square feet of
office and retail space and 489 multifamily units. The 4525 Main
Street development project in the Town Center of Virginia Beach is 46%
pre-leased.
-
The Company was selected to develop Oceaneering International’s new
155,000 square foot build-to-suit development project in Chesapeake,
Virginia. Construction began in the fourth quarter of 2013 with
expected completion in the first quarter of 2015. This build-to-suit
project is 100% pre-leased. The Company facilitated this public /
private project among the City of Chesapeake, the Commonwealth of
Virginia and Oceaneering International.
-
On January 17, 2014, the Company closed on the previously announced
acquisition of Liberty Apartments in Newport News, Virginia, for $30.7
million. Liberty Apartments is part of a $70 million public / private,
mixed-use development project with the Newport News Shipbuilding
division of Huntington Ingalls Industries, the Commonwealth of
Virginia and the Industrial Development Authority of the City of
Newport News, Virginia.
-
$28.5 million of new construction loans, since September 30, 2013, to
fund the development pipeline.
-
$6.8 million of new construction contract work executed during the
quarter; approximately $46.4 million of total backlog at the end of
the quarter.
-
The Board of Directors declared a cash dividend of $0.16 per share on
the Company's shares of common stock for the first quarter of 2014.
The dividend will be payable in cash on April 10, 2014 to stockholders
of record on April 1, 2014.
“We are pleased with our strong finish to the year. The fourth quarter
is traditionally our strongest quarter and this year is no exception,”
commented Louis Haddad, Chief Executive Officer. “We view 2013 as a year
in which we laid the foundation, through our development pipeline, for
sustained future net operating income and asset value growth. We
accomplished what we set out to do this year, including executing on
development opportunities, identifying attractive opportunities for the
next generation pipeline, and positioning our income portfolio for
further growth. Execution will remain our focus in 2014 and 2015.”
Financial Results
Net income was $2.9 million, or $0.09 per diluted share, for the three
months ended December 31, 2013. Core FFO was $7.1 million, or $0.22 per
diluted share, for the three months ended December 31, 2013. A
reconciliation of GAAP net income to Core FFO is presented on page eight
of this release.
Operating Performance
The Company executed four new office leases and five office lease
renewals totaling 64,000 square feet, and two new retail leases and
seven retail lease renewals totaling 41,000 square feet. At the end of
the fourth quarter, the Company’s office, retail and multifamily
operating property portfolios were 95.2%, 93.4% and 94.2% occupied,
respectively.
General Contracting Activity
During the quarter, the Company executed $6.8 million of new
construction contracts and generated $1.4 million of gross profit from
its third party construction contracts. The Company had total backlog of
approximately $46.4 million at December 31, 2013.
Balance Sheet and Financing Activity
At the end of the fourth quarter, the Company had total outstanding debt
of approximately $277.7 million, including $70.0 million outstanding on
its revolving credit facility.
In October, the Company closed on an $18.5 million loan to fund
construction of the Whetstone Apartments in Durham, North Carolina,
increased the aggregate capacity under the revolving credit facility to
$155.0 million, and repaid the $10.8 million loan secured by Bermuda
Crossroads. In October, the Company also refinanced the six loans
secured by Broad Creek Shopping Center, Commerce Street Retail, Hanbury
Village, and Tyre Neck Harris Teeter to reduce the interest rates, make
the loans nonrecourse, and extend the maturity dates to 2018.
In December, the Company refinanced the loan secured by Smith’s Landing
to extend the maturity date to 2017 and closed on a $10.0 million loan
to fund construction of Sandbridge Commons in Virginia Beach, Virginia.
Supplemental Financial Information
Further details regarding operating results, properties and leasing
statistics can be found in the Company’s supplemental financial package
available at www.ArmadaHoffler.com
under the Investor Relations section.
Webcast and Conference Call
The Company will host a webcast and conference call on Thursday,
February 20, 2014 at 8:30 a.m. Eastern Time to review fourth quarter
ended December 31, 2013 results and discuss recent events. The live
webcast will be available through the Investor Relations page of the
Company’s website, www.ArmadaHoffler.com,
or through www.viavid.com.
To participate in the call, please dial 877-407-3982 (domestic) or
201-493-6780 (international). A replay of the conference call will be
available through Thursday, March 20, 2014, by dialing 877-870-5176
(domestic) or 858-384-5517 (international) and entering the pass code
13574420.
About Armada Hoffler Properties, Inc.
Armada Hoffler Properties, Inc. is a full service real estate company
with extensive experience developing, building, owning and managing
high-quality, institutional-grade office, retail and multifamily
properties in attractive markets throughout the Mid-Atlantic United
States. The Company has elected to be taxed as a real estate investment
trust (REIT) for U.S. federal income tax purposes.
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 identified and next
generation development pipelines, the Company’s construction and
development business including backlog, and financing activities as well
as comments on the Company’s outlook. 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 final prospectus
related to its IPO, which was filed with the Securities and Exchange
Commission on May 9, 2013, and other documents filed by the Company with
the Securities and Exchange Commission.
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 gains (or losses) from sales of depreciable operating
property, real estate related depreciation and amortization (excluding
amortization of deferred financing costs) and after adjustments for
unconsolidated partnerships and joint ventures.
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 year
over year, 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.
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, the Company further adjusts FFO to arrive at
Core FFO, which eliminates certain of these items, including, but not
limited to, gains and losses on the extinguishment of debt and non-cash
stock compensation expense.
For reference, as an aid in understanding the Company’s computation of
FFO and Core FFO, a reconciliation of net income calculated in
accordance with GAAP to FFO and Core FFO has been included on page eight
of this release.
|
|
|
|
|
ARMADA HOFFLER PROPERTIES, INC.
|
CONDENSED CONSOLIDATED BALANCE SHEET
|
(dollars in thousands)
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
Real estate investments:
|
|
|
|
|
Income producing property
|
|
$
|
406,239
|
|
|
$
|
350,814
|
|
Held for development
|
|
|
-
|
|
|
|
3,926
|
|
Construction in progress
|
|
|
56,737
|
|
|
|
-
|
|
Accumulated depreciation
|
|
|
(105,228
|
)
|
|
|
(92,454
|
)
|
Net real estate investments
|
|
|
357,748
|
|
|
|
262,286
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
18,882
|
|
|
|
9,400
|
|
Restricted cash
|
|
|
2,160
|
|
|
|
3,725
|
|
Accounts receivable, net
|
|
|
18,272
|
|
|
|
17,423
|
|
Construction receivables, including retentions
|
|
|
12,633
|
|
|
|
10,490
|
|
Construction costs and estimated earnings in excess of billings
|
|
|
1,178
|
|
|
|
1,206
|
|
Other assets
|
|
|
24,409
|
|
|
|
27,283
|
|
Total Assets
|
|
$
|
435,282
|
|
|
$
|
331,813
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
Indebtedness:
|
|
|
|
|
Secured debt
|
|
|
277,745
|
|
|
|
334,438
|
|
Participating note
|
|
|
-
|
|
|
|
643
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
6,463
|
|
|
|
2,478
|
|
Construction payables, including retentions
|
|
|
28,139
|
|
|
|
17,369
|
|
Billings in excess of construction costs and estimated earnings
|
|
|
1,541
|
|
|
|
4,236
|
|
Other liabilities
|
|
|
15,873
|
|
|
|
13,990
|
|
Total Liabilities
|
|
$
|
329,761
|
|
|
$
|
373,154
|
|
Total Equity
|
|
|
105,521
|
|
|
|
(41,341
|
)
|
Total Liabilities and Equity
|
|
$
|
435,282
|
|
|
$
|
331,813
|
|
|
|
|
|
|
|
|
|
|
ARMADA HOFFLER PROPERTIES, INC.
|
CONDENSED CONSOLIDATED INCOME STATEMENT
|
(dollars in thousands, except per share)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
Rental revenues
|
|
$
|
14,992
|
|
|
$
|
14,122
|
|
|
$
|
57,520
|
|
|
$
|
54,436
|
|
General contracting and real estate services
|
|
|
19,373
|
|
|
|
13,391
|
|
|
|
82,516
|
|
|
|
54,046
|
|
Total revenues
|
|
|
34,365
|
|
|
|
27,513
|
|
|
|
140,036
|
|
|
|
108,482
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Rental expenses
|
|
|
3,557
|
|
|
|
3,237
|
|
|
|
14,025
|
|
|
|
12,682
|
|
Real estate taxes
|
|
|
1,347
|
|
|
|
1,273
|
|
|
|
5,124
|
|
|
|
4,865
|
|
General contracting and real estate services
|
|
|
17,945
|
|
|
|
11,903
|
|
|
|
78,813
|
|
|
|
50,103
|
|
Depreciation and amortization
|
|
|
3,786
|
|
|
|
3,612
|
|
|
|
14,898
|
|
|
|
12,909
|
|
General and administrative
|
|
|
1,725
|
|
|
|
540
|
|
|
|
6,937
|
|
|
|
3,232
|
|
Impairment charges
|
|
|
47
|
|
|
|
-
|
|
|
|
580
|
|
|
|
-
|
|
Total expenses
|
|
|
28,407
|
|
|
|
20,565
|
|
|
|
120,377
|
|
|
|
83,791
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
5,958
|
|
|
|
6,948
|
|
|
|
19,659
|
|
|
|
24,691
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(2,501
|
)
|
|
|
(4,043
|
)
|
|
|
(12,303
|
)
|
|
|
(16,561
|
)
|
Loss on extinguishment of debt
|
|
|
(135
|
)
|
|
|
-
|
|
|
|
(2,387
|
)
|
|
|
-
|
|
Gain on acquisitions
|
|
|
-
|
|
|
|
-
|
|
|
|
9,460
|
|
|
|
-
|
|
Other income (expense)
|
|
|
(46
|
)
|
|
|
244
|
|
|
|
297
|
|
|
|
777
|
|
Income before taxes
|
|
|
3,276
|
|
|
|
3,149
|
|
|
|
14,726
|
|
|
|
8,907
|
|
Income tax provision
|
|
|
(410
|
)
|
|
|
-
|
|
|
|
(273
|
)
|
|
|
-
|
|
Continuing operations
|
|
|
2,866
|
|
|
|
3,149
|
|
|
|
14,453
|
|
|
|
8,907
|
|
Discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10
|
)
|
Net income
|
|
$
|
2,866
|
|
|
$
|
3,149
|
|
|
$
|
14,453
|
|
|
$
|
8,897
|
|
|
|
|
|
|
|
|
|
|
Per Share:
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
$
|
0.09
|
|
|
|
|
$
|
0.39
|
|
|
|
Weighted Average Common Shares and Units:
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
32,223
|
|
|
|
|
|
32,105
|
|
|
|
|
|
|
ARMADA HOFFLER PROPERTIES, INC.
|
RECONCILIATION OF NET INCOME TO CORE FUNDS FROM OPERATIONS
|
(dollars in thousands, except per share)
|
|
|
|
|
|
Three Months Ended
|
|
|
December 31, 2013
|
|
|
(Unaudited)
|
|
|
|
Net income
|
|
$
|
2,866
|
|
|
|
Depreciation and amortization
|
|
|
3,786
|
|
|
|
Funds From Operations
|
|
$
|
6,652
|
|
|
|
Loss on extinguishment of debt
|
|
|
135
|
Non-cash stock compensation
|
|
|
237
|
Impairment charges
|
|
|
47
|
Loan modification costs
|
|
|
27
|
|
|
|
Core Funds From Operations
|
|
$
|
7,098
|
|
|
|
Core Funds From Operations per diluted share
|
|
$
|
0.22
|
|
|
|
Common Shares and Units Outstanding
|
|
|
32,223
|
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