Armada Hoffler Properties, Inc. - FORM 8-K - EX-99.2 - EXHIBIT 99.2

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8-K - FORM 8-K - Armada Hoffler Properties, Inc.	d581600d8k.htm
EX-99.1 - EXHIBIT 99.1 - Armada Hoffler Properties, Inc.	d581600dex991.htm

Exhibit 99.2

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Armada Hoffler Properties, Inc.

Second Quarter 2013 Supplemental Information

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Forward-Looking Statement

This Supplemental Information should be read in conjunction with our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (the “10-Q”), the consolidated financial statements and notes thereto appearing in the 10-Q and our press release, dated August 13, 2013, which has been filed as Exhibit 99.1 to our Form 8-K filed on August 13, 2013. We make statements in this Supplemental Information 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”)). In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated growth in our core funds from operation, funds available for distribution and net operating income are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events.

Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). For further discussion of factors that could impact our future results, please refer to our Registration Statement on Form S-11, initially filed with the Securities and Exchange Commission (the “SEC”) on March 26, 2013, as subsequently amended, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 and the documents subsequently filed by us from time to time with the SEC.


Second Quarter 2013 Supplemental Information		Page 2

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Table of Contents


Company Highlights			4

Summary			5

Balance Sheet			6

Income Statement			7

Pro Forma Core Funds From Operations			8

Same Store Net Operating Income			9

Portfolio Summary			10

Portfolio Summary Notes			11

Historical Segment Occupancy			12

Multifamily Occupancy Summary			13

Office Leasing Summary			14

Retail Leasing Summary			15

Top Tenants			16

Office Lease Expirations			17

Office Lease Expirations			18

Development Pipeline			19

Market Capitalization			20

Debt Summary			21

Definitions			22


Second Quarter 2013 Supplemental Information		Page 3

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Second Quarter 2013 Highlights

•

Generated Pro Forma Core FFO (Funds From Operations) of $6.5 Million, or $0.20 per share.

•

Average occupancy stable at 93.5% when compared to the prior quarter and year end 2012.

•

Executed new and renewal leases totaling over 80,000 square feet in the office and retail property portfolios.

•

Development pipeline of six properties, consisting of 384,600 square feet of office and retail property and 491 multifamily units. The Main Street Office development in Virginia Beach is 46% pre-leased.

•

Engaged in 17 construction contracts at an value of approximately $117.3 million, with approximately $58.2 million of work still to be completed.

•

Completed a successful initial public offering (IPO) raising gross proceeds of approximately $218.5 million.


Second Quarter 2013 Supplemental Information		Page 4

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Summary Information

$ in thousands except per share data & rentable square feet/multifamily units


	Three months ended
	6/30/2013
	(Unaudited)
Shares and Units:

Common Shares outstanding at end of period		19,164
Common Units outstanding at end of period		13,059
Total		32,223

Share Price:
At end of period	$	11.78
High during period	$	11.83
Low during period	$	11.13

Financial Information:
Rental revenues	$	14,231
General contracting and real estate services revenue		23,291
Net operating income (NOI)		10,372
Net income		8,404
Funds from operations (FFO)		2,886
Pro forma FFO		4,031
Pro forma Core FFO		6,458

Pro forma Core FFO per share	$	0.20

Wholly - owned property information:

Rentable square feet or number of units:
Office		954,458
Retail		1,094,663
Multifamily		626

Occupancy:
Office⁽¹⁾		93.4	%
Retail⁽¹⁾		94.6	%
Multifamily⁽²⁾		91.2	%

Weighted Average⁽³⁾		93.5	%

(1)	Office and retail occupancy based on occupied square feet as a % of respective total

(2)	Multifamily occupancy based on weighted average of total units

(3)	Total occupancy weighted by annualized base rent


Second Quarter 2013 Supplemental Information		Page 5

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Summary Balance Sheet

$ in thousands


	As of
	6/30/2013			12/31/2012
	(Unaudited)
Assets
Real estate, at cost
Income producing property	$	403,296		$	350,814
Held for development		4,733			3,926
Construction in progress		12,258			—
Accumulated depreciation		(98,612	)		(92,454	)
Net real estate investments		321,675			262,286
Cash and cash equivalents		14,737			9,400
Restricted cash		3,117			3,725
Construction assets		18,412			11,696
Other assets		41,366			44,706

Total Assets	$	399,307		$	331,813


Liabilities and Equity
Indebtedness:
Secured debt	$	244,336		$	334,438
Participating note		—			643
Construction liabilities		20,770			21,605
Other liabilities		22,650			16,468

Total Liabilities	$	287,756		$	373,154

Equity		111,551			(41,341	)

Total Liabilities and Equity	$	399,307		$	331,813


Second Quarter 2013 Supplemental Information		Page 6

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Summary Income Statement

$ in thousands


	Three months ended						Six months ended
	6/30/2013			6/30/2012			6/30/2013			6/30/2012
	(Unaudited)
Revenues:
Rental revenues	$	14,231		$	13,609		$	27,629		$	26,996
General contracting and real estate services revenues		23,291			12,383			41,247			27,024

Total Revenues	$	37,522		$	25,992		$	68,876		$	54,020

Expenses:
Rental expenses	$	3,399		$	2,944		$	6,628		$	5,808
Real estate taxes		1,248			1,209			2,460			2,392
General contracting and real estate services expenses		22,503			11,501			39,961			25,493
Depreciation and amortization		4,020			3,232			7,179			6,579
General and administrative expenses		2,857			954			3,574			1,788
Impairment charges		533			—			533			—

Total Expenses		34,560			19,840			60,335			42,060

Operating Income	$	2,962		$	6,152		$	8,541		$	11,960
Interest expense		(3,289	)		(4,217	)		(7,204	)		(8,344	)
Loss on extinguishment of debt		(1,125	)		—			(1,125	)		—
Gain on acquisition		9,460			—			9,460			—
Other income (expense)		185			164			452			387

Income from continuing operations, before tax		8,193			2,099			10,124			4,003
Income tax benefit		211			—			211			—

Income from continuing operations		8,404			2,099			10,335			4,003
Discontinued operations:
Loss from discontinued operations		—			(9	)		—			(35	)
Loss on sale of real estate		—			20			—			25

Results from discontinued operations		—			11			—			(10	)

Net income	$	8,404		$	2,110		$	10,335		$	3,993

Net income attributable to Predecessor		(89	)					(2,020	)
Net income attributable to noncontrolling interests in operating partnership		(3,429	)					(3,429	)

Net income attributable to common stockholders	$	4,886					$	4,886


Second Quarter 2013 Supplemental Information		Page 7

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Pro Forma Core Funds From Operations

$ in thousands, except per share


	Three months ended
	6/30/2013
	(Unaudited)
Funds from Operations (FFO)

Net income	$	8,404
Depreciation and amortization		4,020
Gain on acquisitions		(9,460	)
Real estate joint ventures		(78	)

FFO, as defined by NAREIT	$	2,886

Pro Forma FFO

FFO, as defined by NAREIT	$	2,886
Interest expense		1,060
Real estate joint ventures		285
General and administrative expenses		(200	)

Pro Forma FFO	$	4,031

Pro Forma Core FFO

Pro Forma FFO	$	4,031
Loss on extinguishment of debt		1,125
Non-cash stock compensation		769
Impairment charges		533

Pro Forma Core FFO	$	6,458


Pro Forma Core FFO per share	$	0.20

Common Shares and Units Outstanding		32,223


Second Quarter 2013 Supplemental Information		Page 8

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Same-Store Portfolio Net Operating Income (NOI)

$ in thousands


	Three months ended 6/30,									Six months ended 6/30,
	2013			2012			Change			2013			2012			Change
	(Unaudited)									(Unaudited)
Office⁽¹⁾
Revenue	$	6,420		$	6,566		$	(146	)	$	12,906		$	12,959		$	(53	)
Expenses		1,940			1,804			136			3,886			3,650			236

Net Operating Income		4,480			4,762			(282	)		9,020			9,309			(289	)

Retail⁽²⁾
Revenue		4,986			5,096			(110	)		9,849			10,196			(347	)
Expenses		1,510			1,450			60			3,124			2,976			148

Net Operating Income		3,476			3,646			(170	)		6,725			7,220			(495	)

Multi Family⁽³⁾
Revenue		1,903			1,856			47			3,810			3,750			60
Expenses		875			839			36			1,690			1,507			183

Net Operating Income		1,028			1,017			11			2,120			2,243			(123	)
								—

Net Operating Income (NOI), GAAP basis	$	8,984		$	9,425		$	(441	)	$	17,865		$	18,772		$	(907	)


Net effect of straight-line rents		(141	)		(366	)		225			(353	)		(787	)		434
Amortization of lease incentives		206			182			24			402			364			38

Same-store portfolio NOI, cash basis	$	9,049		$	9,241		$	(192	)	$	17,914		$	18,349		$	(435	)


Cash Basis:
Office	$	4,237		$	4,361		$	(124	)	$	8,447		$	8,469		$	(22	)
Retail		3,778			3,859			(81	)		7,335			7,631			(296	)
Multifamily		1,034			1,021			13			2,132			2,249			(117	)

	$	9,049		$	9,241		$	(192	)	$	17,914		$	18,349		$	(435	)


GAAP Basis:
Office	$	4,480		$	4,762		$	(282	)	$	9,020		$	9,309		$	(289	)
Retail		3,476			3,646			(170	)		6,725			7,220			(495	)
Multifamily		1,028			1,017			11			2,120			2,243			(123	)

	$	8,984		$	9,425		$	(441	)	$	17,865		$	18,772		$	(907	)

(1)	No assets excluded

(2)	Bermuda Crossroads and Tyre Neck Harris Teeter excluded

(3)	Smith’s Landing excluded


Second Quarter 2013 Supplemental Information		Page 9

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Portfolio Summary as of 6/30/2013


Property	Location	Year Built		Net Rentable Square Feet⁽¹⁾			% Leased⁽²⁾			Annualized Base Rent⁽³⁾		Annualized Base Rent per Leased Sq. Ft.⁽³⁾			Average Net Effective Annual Base Rent per Leased Sq. Ft.⁽⁴⁾

Office Properties
Armada Hoffler Tower⁽⁵⁾	Virginia Beach, VA		2002		328,436			95.9	%	$	8,656,685	$	27.49		$	26.25
One Columbus	Virginia Beach, VA		1984		129,424			95.6	%		2,836,177		22.92			23.22
Two Columbus	Virginia Beach, VA		2009		109,215			82.3	%		2,229,517		24.82			25.23
Virginia Natural Gas⁽⁶⁾	Virginia Beach, VA		2010		31,000			100.0	%		568,230		18.33			20.17
Richmond Tower	Richmond, VA		2010		206,969			98.0	%		7,274,896		35.87			41.83
Oyster Point	Newport News, VA		1989		100,214			79.8	%		1,719,733		21.50			21.23
Sentara Williamsburg⁽⁶⁾	Williamsburg, VA		2008		49,200			100.0	%		1,006,140		20.45			20.50

Subtotal / Weighted Average Office Portfolio⁽⁷⁾					954,458			93.4	%	$	24,291,378	$	27.25		$	28.29


Retail Properties Not Subject to Ground Lease
Bermuda Crossroads	Chester, VA		2001		111,566			95.4	%	$	1,439,512	$	13.52		$	13.97
Broad Creek Shopping Center	Norfolk, VA		1997-2001		227,750			96.8	%		2,919,295		13.25			12.90
Courthouse 7-11	Virginia Beach, VA		2011		3,177			100.0	%		125,000		39.35			43.81
Gainsborough Square	Chesapeake, VA		1999		88,862			93.0	%		1,291,858		15.64			15.36
Hanbury Village	Chesapeake, VA		2006-2009		61,049			88.7	%		1,345,808		24.87			23.86
North Point Center	Durham, NC		1998-2009		215,689			93.1	%		2,362,403		11.76			11.34
Parkway Marketplace	Virginia Beach, VA		1998		37,804			100.0	%		754,702		19.96			20.88
Harrisonburg Regal	Harrisonburg, VA		1999		49,000			100.0	%		683,550		13.95			13.95
Dick’s at Town Center	Virginia Beach, VA		2002		100,804			83.3	%		798,000		9.50			9.11
249 Central Park Retail	Virginia Beach, VA⁽⁸⁾		2004		92,515			100.0	%		2,552,830		27.59			26.98
Studio 56 Retail	Virginia Beach, VA		2007		11,600			84.8	%		371,200		37.75			36.92
Commerce Street Retail	Virginia Beach, VA		2008		20,123			100.0	%		792,313		39.37	⁽⁹⁾		39.67
Fountain Plaza Retail	Virginia Beach, VA		2004		35,961			100.0	%		972,021		27.03			25.40
South Retail	Virginia Beach, VA		2002		38,763			100.0	%		837,358		21.60			21.06

Subtotal / Weighted Avg Retail Portfolio not Subject to Ground Leases⁽¹⁰⁾					1,094,663			94.6	%	$	17,245,851	$	16.65		$	16.35


Retail Properties Subject to Ground Lease
Bermuda Crossroads⁽¹¹⁾	Chester, VA		2001			⁽¹³⁾		100.0	%	$	163,344
Broad Creek Shopping Center⁽¹²⁾	Norfolk, VA		1997-2001			⁽¹⁴⁾		100.0	%		572,291
Hanbury Village⁽¹¹⁾	Chesapeake, VA		2006-2009			⁽¹⁵⁾		100.0	%		1,067,598
North Point Center⁽¹¹⁾	Durham, NC		1996-2009			⁽¹⁶⁾		100.0	%		1,048,175
Tyre Neck Harris Teeter⁽¹²⁾	Chesapeake, VA		2011			⁽¹⁷⁾		100.0	%		507,603

Subtotal / Weighted Avg Retail Portfolio Subject to Ground Leases								100.0	%	$	3,359,012

Total / Weighted Avg Retail Portfolio					1,094,663	⁽¹⁸⁾		94.6	%	$	20,604,863	$	16.65		$	16.35

Total / Weighted Average Retail and Office Portfolio					2,049,121			94.0	%	$	44,896,241	$	21.55		$	21.91


Property	Location	Year Built		Units⁽¹⁹⁾		% Leased⁽²⁾			Annualized Base Rent⁽²⁰⁾			Average Monthly Base Rent per Leased Unit⁽²¹⁾
Multifamily
Smith’s Landing⁽²²⁾	Blacksburg, VA		2009		284		93.0	%	$	3,273,291		$	1,033.24
The Cosmopolitan	Virginia Beach, VA		2006		342		89.8	%		6,321,732	⁽²³⁾		1,463.25

Total / Weighted Avg Multifamily Portfolio					626		91.2	%	$	9,595,023		$	1,264.43


Second Quarter 2013 Supplemental Information		Page 10

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Portfolio Definitions

(1)

The net rentable square footage for each of our office properties is the sum of (a) the square footages of existing leases, plus (b) for available space, management’s estimate of net rentable square footage based, in part, on past leases. The net rentable square footage included in office leases is generally determined consistently with the Building Owners and Managers Association, or BOMA, 1996 measurement guidelines. The net rentable square footage for each of our retail properties is the sum of (a) the square footages of existing leases, plus (b) for available space, the field verified square footage.

(2)

Percentage leased for each of our office and retail properties is calculated as (a) square footage under commenced leases as of June 30, 2013, divided by (b) net rentable square feet, expressed as a percentage. Percentage leased for our multifamily properties is calculated as (a) total units rented as of June 30, 2013, divided by (b) total units available, expressed as a percentage.

(3)

For the properties in our office and retail portfolios, annualized base rent is calculated by multiplying (a) base rental payments (defined as cash base rents (before abatements) excluding tenant reimbursements for expenses paid by the landlord) for the month ended June 30, 2013, by (b) 12. Annualized base rent per leased square foot is calculated by dividing (a) annualized base rent, by (b) square footage under commenced leases as of June 30, 2013. In the case of triple net or modified gross leases, annualized base rent does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses.

(4)

Average net effective annual base rent per leased square foot represents (a) the contractual base rent for leases in place as of June 30, 2013, calculated on a straight-line basis to amortize free rent periods and abatements, but without regard to tenant improvement allowances and leasing commissions, divided by (b) square footage under commenced leases as of June 30, 2013.

(5)

As of June 30, 2013, we occupied 16,151 square feet at this property at an annualized base rent of $484,853, or $30.02 per leased square foot, which amounts are reflected in the % leased, annualized base rent and annualized base rent per square foot columns in the table above. The rent paid by us is eliminated from our revenues in consolidation. In addition, effective March 1, 2013, we sublease approximately 5,000 square feet of space from a tenant at this property.

(6)	This property is subject to a triple net lease pursuant to which the tenant pays operating expenses, insurance and real estate taxes.

(7)	Includes square footage and annualized base rent pursuant to leases for space occupied by us.

(8)

As of June, 2013, we occupied 8,995 square feet at this property at an annualized base rent of $270,839, or $30.11 per leased square foot, which amounts are reflected in the % leased, annualized base rent and annualized base rent per square foot columns in the table above. The rent paid by us is eliminated from our revenues in consolidation.

(9)	Includes $31,200 of annualized base rent pursuant to a rooftop lease.

(10)	Reflects square footage and annualized base rent pursuant to leases for space occupied by us.

(11)	For this ground lease, we own the land and the tenant owns the improvements thereto. We will succeed to the ownership of the improvements to the land upon the termination of the ground lease.

(12)	We lease the land underlying this property from the owner of the land pursuant to a ground lease. We re-lease the land to our tenant under a separate ground lease pursuant to which our tenant owns the improvements on the land.

(13)	Tenants collectively lease approximately 139,356 square feet of land from us pursuant to ground leases.

(14)	Tenants collectively lease approximately 299,170 square feet of land from us pursuant to ground leases.

(15)	Tenants collectively lease approximately 105,988 square feet of land from us pursuant to ground leases.

(16)	Tenants collectively lease approximately 1,443,985 square feet of land from us pursuant to ground leases.

(17)	Tenant leases approximately 200,073 square feet of land from us pursuant to a ground lease.

(18)	The total square footage of our retail portfolio excludes the square footage of land subject to ground leases.

(19)	Units represent the total number of apartment units available for rent at June 30, 2013.

(20)	For the properties in our multifamily portfolio, annualized base rent is calculated by multiplying (a) base rental payments for the month ended June 30, 2013 by (b) 12.

(21)	Average monthly base rent per leased unit represents the average monthly rent for all leased units for the month ended June 30, 2013.

(22)	We lease the land underlying this property from the owner of the land pursuant to a ground lease.

(23)	The annualized base rent for The Cosmopolitan includes $931,125 of annualized rent from 15 retail leases at the property.


Second Quarter 2013 Supplemental Information		Page 11

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Historical Occupancy


	Occupancy - All Properties as of
Sector	6/30/2013			3/31/2013			12/31/2012
Office⁽¹⁾		93.4	%		93.9	%		94.1	%
Retail⁽¹⁾		94.6	%		93.9	%		93.9	%
Multifamily⁽²⁾		91.2	%		93.3	%		94.9	%

Total⁽³⁾		93.5	%		93.8	%		94.2	%

(1)	Office and retail occupancy based on occupied square feet as a % of respective total

(2)	Multifamily occupancy based on weighted average of total units

(3)	Total occupancy weighted by annualized base rent


Second Quarter 2013 Supplemental Information		Page 12

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Multifamily Occupancy Summary


Occupancy Summary - Smiths Landing
Quarter Ended	Number of Units Occupied		Percentage Occupied⁽¹⁾			Annualized Base Rent⁽²⁾		Average Monthly Rent per Occupied Unit
6/30/2013⁽⁴⁾		264		93.0	%	$	3,273,291	$	1,033.24
3/31/2013		284		100.0	%	$	3,354,463	$	984.29
12/31/2012		280		98.6	%	$	3,305,046	$	983.64


Occupancy Summary - The Cosmopolitan
Quarter Ended	Number of Units Occupied		Percentage Occupied⁽¹⁾			Annualized Base Rent⁽²⁾⁽³⁾		Average Monthly Rent per Occupied Unit
6/30/2013		307		89.9	%	$	5,390,607	$	1,463.25
3/31/2013		300		87.7	%	$	5,642,035	$	1,567.23
12/31/2012		314		91.8	%	$	5,636,650	$	1,494.50

(1)	Total units rented as of each respective quarter end date

(2)	Annualized base rent is calculated by multiplying base rental payments for each of the last month of the respective quarter multiplied by 12

(3)	Excludes annualized base rent from retail leases


Second Quarter 2013 Supplemental Information		Page 13

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Historical Office Lease Retention and Tenant Improvement and Leasing Commission Costs

The following table sets forth certain historical information regarding tenant improvement and leasing commission costs per square foot at the properties in our office portfolio for the three months ended 6/30/2013:


	Three months ended
	6/30/2013
Expirations
Number of Leases expired during the applicable period		4
Aggregate net rentable square footage of expiring leases⁽¹⁾		16,635
Renewals
Number of Leases renewed during the applicable period		5
Aggregate net rentable square footage of renewed leases		29,725
Retention percentage by square feet		76.1	%
Tenant improvement costs⁽²⁾	$	309,426
Leasing commission costs⁽²⁾		171,963

Total tenant improvements and leasing commission costs	$	481,389

Tenant improvement costs per square foot	$	10.41
Leasing commission costs per square foot	$	5.79

Total tenant improvements and leasing commission costs per square foot	$	16.19


New Leases
Number of New Leases		2
Square Feet		4,046
Tenant improvement costs^{(2) (3)}	$	155,148
Leasing commission costs⁽²⁾		10,480

Total tenant improvements and leasing commission costs	$	165,628

Tenant improvement costs per square foot	$	38.35
Leasing commission costs per square foot	$	2.59

Total tenant improvements and leasing commission costs per square foot	$	40.94


Total Tenant Improvements and Leasing Commissions
Square feet		33,771
Tenant improvement costs^{(2) (3)}	$	464,574
Leasing commission costs⁽²⁾		182,443

Total tenant improvement and leasing commission costs	$	647,017

Tenant improvement costs per square foot^{(2) (3)}	$	13.76
Leasing commission costs per square foot⁽²⁾	$	5.40

Total tenant improvement and leasing commission costs per square foot	$	19.16

(1)	Excludes properties subject to ground lease

(2)	Reflects tenant improvement and leasing commissions incurred during the three months ended 6/30/13, which may be different than the period in which the lease commenced

(3)	Excludes $27.39 PSF for landward base building work above ceiling related to a 1,400 SF lease at Two Columbus


Second Quarter 2013 Supplemental Information		Page 14

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Historical Retail Lease Retention and Tenant Improvement and Leasing Commission Costs

The following table sets forth certain historical information regarding tenant improvement and leasing commission costs per square foot at the properties in our retail portfolio for the three months ended 6/30/2013:


	Three months ended
	6/30/2013
Expirations
Number of Leases expired during the applicable period		3
Aggregate net rentable square footage of expiring leases⁽¹⁾		7,728
Renewals
Number of Leases renewed during the applicable period		6
Aggregate net rentable square footage of renewed leases		26,345
Retention percentage by square feet		100.0	%
Tenant improvement costs⁽²⁾	$	0
Leasing commission costs⁽²⁾		0

Total tenant improvements and leasing commission costs	$	0

Tenant improvement costs per square foot	$	0.00
Leasing commission costs per square foot	$	0.00

Total tenant improvements and leasing commission costs per square foot	$	0.00


New Leases
Number of New Leases		7
Square Feet		20,037
Tenant improvement costs⁽²⁾	$	317,000
Leasing commission costs⁽²⁾		116,101

Total tenant improvements and leasing commission costs	$	433,101

Tenant improvement costs per square foot	$	15.82
Leasing commission costs per square foot	$	5.79

Total tenant improvements and leasing commission costs per square foot	$	21.62


Total Tenant Improvements and Leasing Commissions
Square feet		46,382
Tenant improvement costs⁽²⁾	$	317,000
Leasing commission costs⁽²⁾		116,101

Total tenant improvement and leasing commission costs	$	433,101

Tenant improvement costs per square foot⁽²⁾	$	6.83
Leasing commission costs per square foot⁽²⁾	$	2.50

Total tenant improvement and leasing commission costs per square foot	$	9.34

(1)	Excludes properties subject to ground lease

(2)	Reflects tenant improvement and leasing commissions incurred during the three months ended 6/30/13, which may be different than the period in which the lease commenced


Second Quarter 2013 Supplemental Information		Page 15

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Top 10 Tenants by Annualized Base Rent as of 6/30/2013


Office Portfolio
Tenant	Number of Leases	Number of Properties	Property(ies)	Lease Expiration		Weighted Annualized Base Rent		% of Office Portfolio Annualized Base Rent			% of Total Portfolio Annualized Base Rent
Williams Mullen	3	2	Armada Hoffler Tower, Richmond Tower		3/19/2026	$	7,779,349		32.0	%		14.3	%
Troutman Sanders LLP	1	1	Armada Hoffler Tower		1/31/2015		1,026,938		4.2	%		1.9	%
Sentara Medical Group	1	1	Sentara Williamsburg		3/31/2023		1,006,140		4.1	%		1.8	%
Pender & Coward	2	1	Armada Hoffler Tower		1/31/2015		972,179		4.0	%		1.8	%
Cherry, Bekaert & Holland, LLP	3	3	Armada Hoffler Tower, Richmond Tower, Oyster Point		9/21/2022		932,547		3.8	%		1.7	%
GSA-USAF	1	1	Oyster Point		4/26/2017		870,047		3.6	%		1.6	%
The Art Institute	1	1	Two Columbus		12/31/2019		771,898		3.2	%		1.4	%
Hampton University	2	1	Armada Hoffler Tower		5/3/2023		629,935		2.6	%		1.2	%
Virginia Natural Gas	1	1	Virginia Natural Gas Headquarters		9/30/2025		568,230		2.3	%		1.0	%
Hankins & Anderson	1	1	Armada Hoffler Tower		4/30/2022		562,363		2.3	%		1.0	%

Top 10 Total						$	15,119,627		62.2	%		27.7	%


Retail Portfolio
Tenant	Number of Leases	Number of Properties	Property(ies)	Lease Expiration		Weighted Annualized Base Rent		% of Retail Portfolio Annualized Base Rent			% of Total Portfolio Annualized Base Rent
Home Depot	2	2	Broad Creek Shopping Center, North Point Center		12/27/2019	$	2,032,600		9.9	%		3.7	%
Harris Teeter	2	2	Tyre Neck Harris Teeter, Hanbury Village		10/15/2028		1,430,001		6.9	%		2.6	%
Food Lion	3	3	Broad Creek Shopping Center, Bermuda Crossroads, Gainsborough Square		3/19/2020		1,282,568		6.2	%		2.4	%

Dick’s Sporting Goods	1	1	Dick’s at Town Center		1/31/2020		798,000		3.9	%		1.5	%
Regal Cinemas	1	1	Harrisonburg Regal		4/23/2019		683,550		3.3	%		1.3	%
PetsMart	2	2	Broad Creek Shopping Center, North Point Center		2/7/2016		618,704		3.0	%		1.1	%
Kroger	1	1	North Point Center		8/31/2018		552,864		2.7	%		1.0	%
Yard House	1	1	Commerce Street Retail		11/30/2023		538,000		2.6	%		1.0	%
Rite Aid	2	2	Gainsborough Square, Parkway Marketplace		5/29/2019		484,193		2.3	%		0.9	%
Walgreens	1	1	Hanbury Village		12/31/2083		447,564		2.2	%		0.8	%

Top 10 Total						$	8,868,044		43.0	%		16.3	%


Second Quarter 2013 Supplemental Information		Page 16

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Lease Expirations for Office Portfolio

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Year of Lease Expiration	Number of Leases Expiring		Square Footage of Leases Expiring		% Portfolio Net Rentable Square Feet			Annualized Base Rent		% of Portfolio Annualized Base Rent			Annualized Base Rent per Leased Square Foot
Available		—		63,047		6.6	%	$	—		—		$	0.00
2013		7		34,608		3.6	%		1,020,231		4.2	%		29.48
2014		14		59,226		6.2	%		1,545,787		6.4	%		26.10
2015		9		96,577		10.1	%		2,587,380		10.7	%		26.79
2016		10		33,481		3.5	%		781,772		3.2	%		23.35
2017		4		64,589		6.8	%		1,555,767		6.4	%		24.09
2018		13		139,177		14.6	%		3,653,770		15.0	%		26.25
2019		4		54,264		5.7	%		1,235,086		5.1	%		22.76
2020		3		25,283		2.6	%		769,811		3.2	%		30.45
2021		4		41,363		4.3	%		938,151		3.9	%		22.68
2022		3		48,117		5.0	%		1,258,877		5.2	%		26.16
2023		4		89,009		9.3	%		1,864,058		7.7	%		20.94
Thereafter		5		205,717		21.6	%		7,080,688		29.1	%		34.42

Total / Weighted Average		80		954,458		100.0	%	$	24,291,378		100.0	%	$	27.25

(1)	Annualized base rent as of 6/30/13


Second Quarter 2013 Supplemental Information		Page 17

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Lease Expirations for Retail Portfolio

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Year of Lease Expiration	Number of Leases Expiring		Square Footage of Leases Expiring		% Portfolio Net Rentable Square Feet			Annualized Base Rent		% of Portfolio Annualized Base Rent			Annualized Base Rent per Leased Square Foot
Available		—		58,992		5.4	%	$	—		—		$	0.00
2013		11		16,725		1.5	%		308,903		1.8	%		18.47
2014		19		59,277		5.4	%		1,335,031		7.7	%		22.52
2015		19		93,011		8.5	%		1,728,906		10.0	%		18.59
2016		23		75,645		6.9	%		1,742,502		10.1	%		23.04
2017		19		135,545		12.4	%		1,890,547		11.0	%		13.95
2018		16		115,194		10.5	%		1,630,659		9.5	%		14.16
2019		12		269,729		24.6	%		3,584,803		20.8	%		13.29
2020		5		105,946		9.7	%		1,343,863		7.8	%		12.68
2021		3		15,068		1.4	%		455,649		2.6	%		30.24
2022		6		83,588		7.6	%		1,214,794		7.0	%		14.53
2023		4		23,792		2.2	%		726,576		4.2	%		30.54
Thereafter		5		42,151		3.9	%		1,283,617		7.4	%		30.45

Total / Weighted Average		142		1,094,663		100.0	%	$	17,245,851		100.0	%	$	16.65

(1)	Annualized base rent as of 6/30/13


Second Quarter 2013 Supplemental Information		Page 18

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Development Pipeline

$ in thousands


Property	Location	Property Type	Estimated Square Footage⁽¹⁾			Estimated Apartment Units⁽¹⁾		Estimated Cost⁽¹⁾		Cost Incurred through June 30, 2013		Estimated Date of Completion⁽¹⁾	Estimated Ownership %⁽¹⁾			Principal Tenants
Main Street Office⁽²⁾	Virginia Beach, VA	Office		234,000	⁽³⁾		N/A	$	50,863	$	7,535	July 2014		100	%	Clark Nexsen, Development Authority of Virginia Beach
Main Street Apartments⁽²⁾	Virginia Beach, VA	Multifamily		N/A			288		32,845		2,688	July 2014		100	%	N/A
Jackson Street Apartments	Durham, NC	Multifamily		N/A			203		27,857		3,004	August 2014		100	%	N/A
Sandbridge Commons	Virginia Beach, VA	Retail		75,000			N/A		13,675		645	September 2014		85	%	Harris Teeter
Brooks Crossing	Virginia Beach, VA	Office		60,000			N/A		12,793		672	February 2015		65	%	Huntington Ingalls⁽⁴⁾, City of Newport News⁽⁴⁾
Greentree Shopping Center⁽⁵⁾	Chesapeake, VA	Retail		15,600			N/A		5,402		412	September 2014		100	%	Wawa

				384,600			491	$	143,435	$	14,956

(1)	Represents estimates that may change as the development process proceeds

(2)	This property will be located within the Virginia Beach Town Center

(3)	82,645 square feet is leased to Clark Nexsen, an architectural firm and approximately 23,300 square feet is leased to the Development Authority of Virginia Beach

(4)	No lease agreement has been signed

(5)	We have a contract to sell Wal-Mart a pad-ready site adjacent to Greentree Shopping Center


Second Quarter 2013 Supplemental Information		Page 19

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Market Capitalization

$ in thousands, except per share data


Market Data	June 30, 2013

Common shares outstanding		19,163,705
Common units outstanding		13,059,365

Common shares and common units outstanding		32,223,070
Market price per common share	$	11.78
Equity market capitalization		379,588
Total debt		244,336

Total market capitalization	$	623,924
Less: cash on hand		(17,854	)

Total enterprise value	$	606,070

Total assets, gross	$	497,543


Total debt/Total capitalization		39.2	%
Total debt/Total enterprise value		40.3	%
Total debt/Total assets, gross		49.1	%


Second Quarter 2013 Supplemental Information		Page 20

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Summary of Outstanding Debt

$ in thousands


Debt	Amount Outstanding			Interest Rate⁽¹⁾			Effective Rate as of June 30, 2013			Maturity Date		Balance at Maturity
Oyster Point	$	6,558			5.41	%					December 1, 2015	$	6,089
One Columbus		13,955			5.31	%					December 11, 2014		13,542
Broad Creek Shopping Center
Note 1		4,528			LIBOR 3.00	%		3.19	%		November 29, 2014		4,454
Note 2		8,313			LIBOR+2.75	%		2.94	%		December 7, 2016		7,947
Note 3		3,481			LIBOR+2.75	%		2.94	%		December 7, 2016		3,327
Hanbury Village
Note 1		21,558			6.67	%					October 11, 2017		20,499
Note 2		4,309			LIBOR+2.75	%		2.94	%		February 28, 2015		4,226
Harrisonburg Regal		3,930			6.06	%					June 8, 2017		3,165
North Point Center
Note 1		10,400			6.45	%					February 5, 2019		9,333
Note 2		2,877			7.25	%					September 15, 2015		1,344
Note 4		1,042			5.59	%					December 1, 2014		1,007
Note 5		714			LIBOR+2.00	%		3.57	%⁽²⁾		February 1, 2017		641
Tyre Neck Harris Teeter		2,650			LIBOR+2.75	%		2.94	%		June 10, 2014		2,650
249 Central Park Retail		15,960			5.99	%					September 8, 2016		15,084
South Retail		7,041			5.99	%					September 8, 2016		6,655
Studio 56 Retail		2,725			3.75	%					May 7, 2015		2,592
Commerce Street Retail		6,771			LIBOR+3.00	%		3.19	%		August 18, 2014		6,694
Fountain Plaza Retail		7,980			5.99	%					September 8, 2016		7,542
Dick’s at Town Center		8,366			LIBOR+2.75	%		2.94	%		October 31, 2017		7,929
The Cosmopolitan		48,010			3.75	%					July 1, 2051		—
Bermuda Crossroads		10,834	⁽⁴⁾		6.01	%					January 1, 2014		10,710
Smith’s Landing		24,945	⁽⁴⁾		LIBOR+2.15	%		2.34	%		January 31, 2014		24,770
Main Street Land		2,208			LIBOR+2.50	%		4.00	%⁽³⁾		July 3, 2013		2,208

		219,155											162,408
Credit Facility		25,000			LIBOR + 1.60% - 2.20	%		2.39	%⁽⁵⁾		May 13, 2016		25,000

Total	$	244,155										$	187,408

Unamortized fair value adjustment		181

Indebtedness	$	244,336

(1) LIBOR rate is determined by individual lenders.

Weighted Average Interest Rate

4.48

(2) Subject to an interest rate swap lock.

Variable Interest Rate as a % of Total

37.10

(3) Subject to an interest rate floor.

Weighted Average Maturity (years)

9.56

(4) Principal balance excluding any fair value adjustment that was recognized upon acquisition.

(5) Decreased to 1.94% as of 7/16/13.


Second Quarter 2013 Supplemental Information		Page 21

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Definitions

Core Funds From Operations:

We calculate Core Funds From Operations (“Core FFO”) as FFO calculated in accordance with the standards established by NAREIT, adjusted for losses on debt extinguishments, non-cash stock compensation and impairment charges. Such items are non-recurring or non-cash in nature.

Management believes that the computation of FFO in accordance to NAREIT’s definition includes certain items that are not indicative of the results provided by the Company’s operating portfolio and affect the comparability of the Company’s period-over-period performance. Our calculation of Core FFO differs from NAREIT’s definition of FFO. Other equity REITs may not calculate Core FFO in the same manner as us, and, accordingly, our Core FFO may not be comparable to other REITs’ Core FFO.

Funds From Operations:

We calculate Funds From Operations (“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 accounting principles generally accepted in the United States (“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. Management uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring our 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. Other equity REITs may not calculate FFO in accordance with the NAREIT definition as we do, and, accordingly, our FFO may not be comparable to such other REITs’ FFO.


Second Quarter 2013 Supplemental Information		Page 22

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Definitions

Net Operating Income:

We calculate Net Operating Income (“NOI”) as property revenues (base rent, expense reimbursements and other revenue) less property expenses (rental expenses and real estate taxes). For our office, retail and multifamily segments, NOI excludes general contracting and real estate services expenses, depreciation and amortization, general and administrative expenses, and impairment charges. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to such other REITs’ NOI. NOI is not a measure of operating income or cash flows from operating activities as measured by GAAP and is not indicative of cash available to fund cash needs. As a result, net operating income should not be considered an alternative to cash flows as a measure of liquidity. We consider NOI to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of our real estate business.

Same Store Portfolio:

We define same store properties as including those properties that were owned and operated for the entirety of the period being presented and excluding properties that were in lease-up during the period present. We generally consider a property to be in lease-up until the earlier of (i) the quarter after which the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy. The following table shows the properties included in the same store and non-same store portfolio for the comparative periods presented.


Second Quarter 2013 Supplemental Information		Page 23

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Definitions


	Comparison of Three Months Ended June 30, 2013 to 2012		Comparison of Six Months Ended June 30, 2013 to 2012
	Same Store	Non-Same Store	Same Store	Non-Same Store
Office Properties
Armada Hoffler Tower	X		X
One Columbus	X		X
Two Columbus	X		X
Virginia Natural Gas	X		X
Richmond Tower	X		X
Oyster Point	X		X
Sentara Williamsburg	X		X
Retail Properties
Bermuda Crossroads		X		X
Broad Creek Shopping Center	X		X
Courthouse 7-Eleven	X		X
Gainsborough Square	X		X
Hanbury Village	X		X
North Point Center	X		X
Parkway Marketplace	X		X
Harrisonburg Regal	X		X
Dick’s at Town Center	X		X
249 Central Park Retail	X		X
Studio 56 Retail	X		X
Commerce Street Retail	X		X
Fountain Plaza Retail	X		X
South Retail	X		X
Tyre Neck Harris Teeter		X		X
Multifamily
Smith’s Landing		X		X
The Cosmopolitan	X		X


Second Quarter 2013 Supplemental Information		Page 24

Attached files

Armada Hoffler Properties, Inc. Reports

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