VIRGINIA BEACH, Va., July 31, 2018 (GLOBE NEWSWIRE) -- Armada Hoffler Properties, Inc. (NYSE:AHH) today announced its results for the quarter ended June 30, 2018 and provided an update on current events.

Highlights include:

• Net income of $5.9 million, or $0.09 per diluted share, for the quarter ended June 30, 2018 compared to net income of $4.9 million, or $0.08 per diluted share, for the quarter ended June 30, 2017.
• Normalized Funds From Operations (“FFO”) of $15.2 million, or $0.24 per diluted share, for the quarter ended June 30, 2018 compared to Normalized FFO of $14.7 million, or $0.25 per diluted share, for the quarter ended June 30, 2017.
• FFO of $15.1 million, or $0.24 per diluted share, for the quarter ended June 30, 2018 compared to FFO of $14.2 million, or $0.24 per diluted share, for the quarter ended June 30, 2017.
• The Company raised 2018 full-year Normalized FFO guidance to $1.05 to $1.08 per diluted share, up from $1.00 to $1.05 per diluted share.
• Same Store Net Operating Income (“NOI”) for the quarter ended June 30, 2018 increased 2.1% on a GAAP basis and 2.2% on a cash basis compared to the quarter ended June 30, 2017.
• In July 2018, the Company entered into a contract to sell the build-to-suit distribution center in Chesterfield, Virginia for a sales price of $25.9 million, which is expected to close in the fourth quarter.
• In July 2018, the Company entered into an agreement regarding the sale of its at-cost purchase option to the developer of The Residences at Annapolis Junction. Combined with the anticipated repayment of its related mezzanine loan during the third quarter, the Company expects aggregate proceeds from these transactions in excess of $50 million.
• In July 2018, the Company announced a new development project at Wills Wharf, a site in the Harbor Point area of Baltimore, Maryland. The Company plans to develop a 325,000 square foot mixed-use building with an estimated development cost of $117 million.
• In July 2018, the Company announced a new development project, the Interlock, located in West Midtown Atlanta. This public-private partnership with Georgia Tech is expected to contain 290,000 square feet of office and retail space. The Company's investment will be in the form of a mezzanine loan, and the Company will serve as the general contractor of the project.
• During the quarter ended June 30, 2018, the Company raised approximately $50 million of gross proceeds through its at-the-market equity offering program at an average price of $14.07 per share.
• During the quarter ended June 30, 2018, the Company leased 150,000 square feet including a 10-year lease with Shake Shack, leading the way to the re-development of the Columbus Village shopping center in the Town Center of Virginia Beach.
• The Company sold the Wawa parcel at Indian Lakes Crossing for a 5.35% capitalization rate, bringing the Harris Teeter-anchored center to an approximate 8% capitalization rate overall."

"While we are thrilled to have meaningfully raised our Normalized FFO guidance range for 2018," said Louis Haddad, President and CEO, "we still expect healthy year-over-year earnings growth in 2019 based on the current delivery schedule for the projects in our development pipeline, projected lease up in our portfolio, and the potential for new and accretive transactions."

Financial Results

Net income for the second quarter increased to $5.9 million compared to $4.9 million for the second quarter of 2017. The period-over-period change was primarily due to increased NOI resulting from property acquisitions that took place during 2017 and 2018 as well as increased same-store NOI. Additional increases were due to a period-over-period increase in interest income and an income tax benefit recognized during the second quarter of 2018. These increases to net income were partially offset by lower construction segment gross profits, which were driven by both lower revenues and lower margin in this segment.

Normalized FFO for the second quarter increased to $15.2 million compared to $14.7 million for the second quarter of 2017. FFO for the second quarter increased to $15.1 million compared to $14.2 million for the second quarter of 2017. The period-over-period changes in Normalized FFO and FFO were positively impacted by property acquisitions, increased same-store NOI, higher interest income, and an income tax benefit recognized during the second quarter of 2018. These increases in Normalized FFO and FFO were partially offset by lower construction segment gross profits.

Operating Performance

At the end of the second quarter, the Company’s office, retail and multifamily core operating property portfolios were 94%, 97% and 89% occupied, respectively. Multifamily occupancy was negatively impacted by seasonality attributed to the summer occupancy at the JHU student housing property.

Total construction contract backlog was $37.9 million at the end of the second quarter.

Balance Sheet and Financing Activity

As of June 30, 2018, the Company had $586.8 million of total debt outstanding, including $83.0 million outstanding under its revolving credit facility. Total debt outstanding excludes unamortized GAAP fair value adjustments and deferred financing costs. Approximately 46% of the Company’s debt had fixed interest rates or were subject to interest rate swaps as of June 30, 2018. After considering LIBOR interest rate caps with strike prices at or below 225 basis points as of June 30, 2018, 89% of the Company’s debt was fixed or hedged.

During the six months ended June 30, 2018, the Company began to address the five loans originally scheduled to mature during 2018. Both of the Columbus Village loans were paid off, and the Sandbridge Commons loan was extended for five years. Additionally, the Southgate Square loan and the loan secured by 249 Central Park Retail, Fountain Plaza Retail, and South Retail were each modified to lower the interest rate to a rate of LIBOR plus a spread of 1.60%.

In July 2018, the Company refinanced the loan secured by Johns Hopkins Village. The new $53.0 million floating-rate note bears interest at a rate of LIBOR plus a spread of 1.25% and matures in August 2025. The Company simultaneously entered into an interest rate swap agreement that effectively fixes the interest rate at 4.19%.

Outlook

The Company raised its 2018 full-year guidance and expects 2018 Normalized FFO in the range of $1.05 to $1.08 per diluted share. The following table outlines the Company's updated assumptions along with Normalized FFO per diluted share estimates for the full-year 2018.

About Armada Hoffler Properties, Inc.

Armada Hoffler Properties, Inc. (NYSE: AHH) is a vertically-integrated, self-managed real estate investment trust ("REIT") with nearly four decades of experience developing, building, acquiring and managing high-quality, institutional-grade office, retail 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 its stabilized portfolio. The Company has elected to be taxed as a REIT for U.S. federal income tax purposes.