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What changed in Armada Hoffler Properties, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Armada Hoffler Properties, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+390 added−352 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-23)

Top changes in Armada Hoffler Properties, Inc.'s 2023 10-K

390 paragraphs added · 352 removed · 267 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

57 edited+40 added−41 removed59 unchanged
Biggest changeProperty Location Year Built / Renovated / Redeveloped Ownership Interest Net Rentable Square Feet (1) Occupancy (2) ABR (3) ABR per Leased SF (3) Retail Properties 249 Central Park Retail Virginia Beach, VA 2004 100 % 92,456 100.0 % $ 2,562,965 $ 27.72 Apex Entertainment Virginia Beach, VA 2002/2020 100 % 103,335 100.0 % 1,545,919 14.96 Broad Creek Shopping Center (4) Norfolk, VA 2001 100 % 121,504 95.7 % 2,210,002 19.00 Broadmoor Plaza South Bend, IN 1980 100 % 115,059 98.2 % 1,354,680 11.99 Brooks Crossing Retail Newport News, VA 2016 65 % 18,349 78.3 % 219,975 15.31 Columbus Village Virginia Beach, VA 2013/2020 100 % 62,207 100.0 % 1,899,747 30.54 Columbus Village II Virginia Beach, VA 1996 100 % 92,061 96.7 % 978,078 10.98 Commerce Street Retail Virginia Beach, VA 2008 100 % 19,173 100.0 % 963,746 50.27 Delray Beach Plaza (4) Delray Beach, FL 2021 100 % 87,207 100.0 % 2,997,459 34.37 Dimmock Square Colonial Heights, VA 1998 100 % 106,166 79.0 % 1,559,633 18.59 Fountain Plaza Retail Virginia Beach, VA 2004 100 % 35,961 93.7 % 1,101,937 32.69 Greenbrier Square Chesapeake, VA 2017 100 % 260,710 95.4 % 2,486,750 10.00 Greentree Shopping Center Chesapeake, VA 2014 100 % 15,719 92.6 % 325,081 22.33 Hanbury Village Chesapeake, VA 2009 100 % 98,638 100.0 % 2,007,780 20.36 Harrisonburg Regal Harrisonburg, VA 1999 100 % 49,000 100.0 % 717,850 14.65 Lexington Square Lexington, SC 2017 100 % 85,440 98.3 % 1,860,608 22.15 Market at Mill Creek Mount Pleasant, SC 2018 100 % 80,319 97.7 % 1,841,264 23.46 Marketplace at Hilltop (4) Virginia Beach, VA 2001 100 % 116,953 100.0 % 2,797,454 23.92 Nexton Square Summerville, SC 2020 100 % 133,608 100.0 % 3,479,320 26.04 North Hampton Market Taylors, SC 2004 100 % 114,954 97.9 % 1,503,219 13.36 North Pointe Center Durham, NC 2009 100 % 226,083 100.0 % 2,923,017 12.93 Overlook Village Asheville, NC 1990 100 % 151,365 100.0 % 2,197,835 14.52 Parkway Centre Moultrie, GA 2017 100 % 61,200 100.0 % 850,761 13.90 Parkway Marketplace Virginia Beach, VA 1998 100 % 37,804 100.0 % 780,481 20.65 Patterson Place Durham, NC 2004 100 % 160,942 97.9 % 2,472,240 15.69 Pembroke Square Virginia Beach, VA 1966/2015 100 % 124,181 100.0 % 2,096,262 16.88 Perry Hall Marketplace Perry Hall, MD 2001 100 % 74,256 98.0 % 1,245,907 17.13 Premier Retail Virginia Beach, VA 2018 100 % 39,015 86.8 % 1,140,886 33.70 Providence Plaza Charlotte, NC 2008 100 % 103,118 100.0 % 3,059,505 29.67 Red Mill Commons Virginia Beach, VA 2005 100 % 373,808 96.6 % 6,840,888 18.94 Sandbridge Commons Virginia Beach, VA 2015 100 % 69,417 100.0 % 943,064 13.59 South Retail Virginia Beach, VA 2002 100 % 38,515 100.0 % 1,003,080 26.04 South Square Durham, NC 2005 100 % 109,590 100.0 % 1,984,616 18.11 Southgate Square Colonial Heights, VA 2016 100 % 260,131 100.0 % 3,755,046 14.44 Southshore Shops Chesterfield, VA 2006 100 % 40,307 97.5 % 820,402 20.87 Studio 56 Retail Virginia Beach, VA 2007 100 % 11,594 100.0 % 407,396 35.14 Tyre Neck Harris Teeter (4) Portsmouth, VA 2011 100 % 48,859 100.0 % 559,948 11.46 Wendover Village Greensboro, NC 2004 100 % 176,997 98.8 % 3,430,982 19.63 Total / Weighted Average 3,916,001 97.9 % $ 70,925,783 $ 18.51 5 Table of Contents Location Year Built / Renovated / Redeveloped Ownership Interest Net Rentable Square Feet (1) Occupancy (2) ABR (3) ABR per Leased SF (3) Office Properties 4525 Main Street Virginia Beach, VA 2014 100 % 235,088 100.0 % $ 7,144,928 $ 30.39 Armada Hoffler Tower (5) Virginia Beach, VA 2002 100 % 315,916 98.7 % 9,551,515 30.62 Brooks Crossing Office Newport News, VA 2019 100 % 98,061 100.0 % 1,925,167 19.63 Constellation Office (6) Baltimore, MD 2016 79 % 482,317 97.1 % 15,192,121 32.44 One City Center Durham, NC 2019 100 % 151,599 89.3 % 4,455,053 32.89 One Columbus Virginia Beach, VA 1984 100 % 129,066 98.3 % 3,243,789 25.56 Thames Street Wharf (5) Baltimore, MD 2010 100 % 263,426 100.0 % 7,655,559 29.06 Two Columbus Virginia Beach, VA 2009 100 % 108,459 98.1 % 2,926,307 27.51 Wills Wharf (4) Baltimore, MD 2020 91 % 327,991 90.8 % 9,046,394 30.39 Total / Weighted Average 2,111,923 96.7 % $ 61,140,833 $ 29.92 Location Year Built / Renovated / Redeveloped Ownership Interest Units Occupancy (2) AQR (7) Monthly Rent per Occupied Unit Multifamily Properties 1305 Dock Street (6) Baltimore, MD 2016 79 % 103 92.9 % $ 2,844,720 $ 2,477 1405 Point (4)(8) Baltimore, MD 2018 100 % 289 94.1 % 8,463,276 2,593 Edison Apartments (8) Richmond, VA 1919/2014 100 % 174 96.0 % 3,028,380 1,511 Encore Apartments Virginia Beach, VA 2014 100 % 286 95.6 % 5,605,860 1,709 Gainesville Apartments Gainesville, GA 2022 100 % 223 98.2 % 4,838,964 1,841 Greenside Apartments Charlotte, NC 2018 100 % 225 97.5 % 4,755,864 1,807 Liberty Apartments (8) Newport News, VA 2013 100 % 197 97.0 % 3,645,264 1,590 Premier Apartments Virginia Beach, VA 2018 100 % 131 98.0 % 2,830,644 1,837 Smith’s Landing (4) Blacksburg, VA 2009 100 % 284 97.4 % 5,546,400 1,671 The Cosmopolitan (8) Virginia Beach, VA 2006/2020 100 % 342 94.6 % 8,566,536 2,207 Total / Weighted Average 2,254 96.1 % $ 50,125,908 $ 1,928 ________________________________________ (1) The net rentable square footage for each of our office and retail properties is the sum of (a) the square footage of existing leases, plus (b) for available space, management’s estimate of net rentable square footage based, in part, on past leases.
Biggest changeProperty Location Year Built / Renovated / Redeveloped Ownership Interest Net Rentable Square Feet (1) Occupancy (2) ABR (3) ABR per Leased SF (3) Retail Town Center of Virginia Beach 249 Central Park Retail* Virginia Beach, VA 2004 100 % 92,264 95.8 % $ 2,514,064 $ 28.43 Apex Entertainment* Virginia Beach, VA 2002/2020 100 % 103,335 81.3 % 1,134,000 13.50 Columbus Village* Virginia Beach, VA 2013/2020 100 % 62,207 100.0 % 1,933,084 31.08 Commerce Street Retail* Virginia Beach, VA 2008 100 % 19,173 100.0 % 943,051 49.19 Fountain Plaza Retail* Virginia Beach, VA 2004 100 % 35,961 94.4 % 1,115,851 32.88 Pembroke Square* Virginia Beach, VA 1966/2015 100 % 124,181 100.0 % 2,096,262 16.88 Premier Retail* Virginia Beach, VA 2018 100 % 39,015 86.8 % 1,155,936 34.15 South Retail* Virginia Beach, VA 2002 100 % 38,515 100.0 % 1,046,422 27.17 Studio 56 Retail* Virginia Beach, VA 2007 100 % 11,594 100.0 % 410,652 35.42 Grocery Anchored Broad Creek Shopping Center (4) Norfolk, VA 2001 100 % 121,504 95.7 % 2,239,980 19.26 Broadmoor Plaza South Bend, IN 1980 100 % 115,059 98.2 % 1,356,929 12.01 Brooks Crossing Retail* Newport News, VA 2016 65 % (5) 18,349 84.8 % 202,194 13.00 Delray Beach Plaza* (4) Delray Beach, FL 2021 100 % 87,207 98.0 % 2,948,735 34.49 Greenbrier Square Chesapeake, VA 2017 100 % 260,625 100.0 % 2,624,984 10.07 Greentree Shopping Center Chesapeake, VA 2014 100 % 15,719 92.6 % 329,004 22.60 Hanbury Village Chesapeake, VA 2009 100 % 98,638 100.0 % 2,028,304 20.56 Lexington Square Lexington, SC 2017 100 % 85,440 100.0 % 1,956,467 22.90 Market at Mill Creek Mount Pleasant, SC 2018 100 % 80,319 100.0 % 1,916,094 23.86 North Pointe Center Durham, NC 2009 100 % 226,083 100.0 % 2,970,860 13.14 Parkway Centre Moultrie, GA 2017 100 % 61,200 100.0 % 855,879 13.98 Parkway Marketplace Virginia Beach, VA 1998 100 % 37,804 100.0 % 800,895 21.19 Perry Hall Marketplace Perry Hall, MD 2001 100 % 74,251 100.0 % 1,292,038 17.40 Sandbridge Commons Virginia Beach, VA 2015 100 % 69,417 100.0 % 947,321 13.65 Tyre Neck Harris Teeter (4) Portsmouth, VA 2011 100 % 48,859 100.0 % 559,948 11.46 Southeast Sunbelt The Interlock Retail* (4) Atlanta, GA 2021 100 % 107,379 97.2 % 4,931,164 47.25 Nexton Square* Summerville, SC 2020 100 % 133,608 100.0 % 3,487,299 26.10 North Hampton Market Taylors, SC 2004 100 % 114,954 100.0 % 1,597,966 13.90 Overlook Village Asheville, NC 1990 100 % 151,365 100.0 % 2,237,615 14.78 Patterson Place Durham, NC 2004 100 % 159,842 77.2 % 2,082,944 16.77 Providence Plaza* Charlotte, NC 2008 100 % 103,118 100.0 % 3,123,551 30.29 South Square Durham, NC 2005 100 % 109,590 97.1 % 1,918,540 18.02 Wendover Village Greensboro, NC 2004 100 % 176,997 99.3 % 3,560,610 20.27 Mid-Atlantic Dimmock Square Colonial Heights, VA 1998 100 % 106,166 100.0 % 1,927,971 18.16 Harrisonburg Regal Harrisonburg, VA 1999 100 % 49,000 100.0 % 717,850 14.65 Marketplace at Hilltop (4) Virginia Beach, VA 2001 100 % 116,953 100.0 % 2,848,526 24.36 Red Mill Commons Virginia Beach, VA 2005 100 % 373,808 95.7 % 6,960,834 19.45 Southgate Square Colonial Heights, VA 2016 100 % 260,131 100.0 % 3,781,724 14.54 Southshore Shops Chesterfield, VA 2006 100 % 40,307 97.5 % 841,626 21.42 Total / Weighted Average 3,929,937 97.4 % $ 75,397,174 $ 19.70 4 Table of Contents Property Location Year Built / Renovated / Redeveloped Ownership Interest Net Rentable Square Feet (1) Occupancy (2) ABR (3) ABR per Leased SF (3) Office Town Center of Virginia Beach 4525 Main Street* Virginia Beach, VA 2014 100 % 235,088 100.0 % $ 7,272,362 $ 30.93 Armada Hoffler Tower* (6) Virginia Beach, VA 2002 100 % 315,916 97.8 % 9,606,360 31.08 One Columbus* Virginia Beach, VA 1984 100 % 129,066 96.0 % 3,229,531 26.07 Two Columbus* Virginia Beach, VA 2009 100 % 108,460 82.3 % 2,540,344 28.46 Harbor Point - Baltimore Waterfront Constellation Office* Baltimore, MD 2016 90 % 482,209 98.1 % 15,866,391 33.53 Thames Street Wharf* (6) Baltimore, MD 2010 100 % 263,426 99.5 % 7,990,745 30.50 Wills Wharf* (4) Baltimore, MD 2020 100 % 327,991 93.8 % 9,875,417 32.10 Southeast Sunbelt The Interlock Office* (4) Atlanta, GA 2021 100 % 198,721 87.1 % 6,470,562 37.38 One City Center* Durham, NC 2019 100 % 151,599 85.6 % 4,351,672 33.55 Mid-Atlantic Brooks Crossing Office* Newport News, VA 2019 100 % 98,061 100.0 % 1,963,671 20.02 Total / Weighted Average 2,310,537 95.3 % $ 69,167,055 $ 31.42 Property Location Year Built / Renovated / Redeveloped Ownership Interest Units Occupancy (2) AQR (7) Monthly Rent per Occupied Unit Multifamily Town Center of Virginia Beach Encore Apartments* Virginia Beach, VA 2014 100 % 286 94.5 % $ 5,729,220 $ 1,810 Premier Apartments* Virginia Beach, VA 2018 100 % 131 93.1 % 2,861,412 1,923 The Cosmopolitan* (8) Virginia Beach, VA 2006/2020 100 % 342 94.2 % 8,663,664 2,315 Harbor Point - Baltimore Waterfront 1305 Dock Street* Baltimore, MD 2016 90 % 103 95.5 % 2,839,848 2,519 1405 Point* (4)(8) Baltimore, MD 2018 100 % 289 94.9 % 8,825,124 2,656 Southeast Sunbelt Chronicle Mill* (8) (9) Belmont, NC 2022 85 % (5) 238 95.5 % 4,788,024 1,734 The Everly* (10) Gainesville, GA 2022 100 % 223 95.2 % 4,941,168 1,898 Greenside Apartments Charlotte, NC 2018 100 % 225 96.0 % 5,012,424 1,962 Mid-Atlantic The Edison* (8) Richmond, VA 2014 100 % 174 93.3 % 3,094,824 1,565 Liberty Apartments* (8) Newport News, VA 2013 100 % 197 98.5 % 3,849,588 1,672 Smith’s Landing (4) Blacksburg, VA 2009 100 % 284 100.0 % 5,930,964 1,777 Total / Weighted Average 2,492 95.5 % $ 56,536,260 $ 1,979 ________________________________________ * Located in a mixed-use development (1) The net rentable square footage for each of our retail and office properties is the sum of (a) the square footage of existing leases, plus (b) for available space, management’s estimate of net rentable square footage based, in part, on past leases.
Item 1. Business. Our Company References to "we," "our," "us," and "our company" refer to Armada Hoffler Properties, Inc., a Maryland corporation, together with our consolidated subsidiaries, including Armada Hoffler, L.P., a Virginia limited partnership (the "Operating Partnership"), of which we are the sole general partner.
Item 1. Business. Our Company References to "we," "our," "us," "our company," and "Armada Hoffler" refer to Armada Hoffler Properties, Inc., a Maryland corporation, together with our consolidated subsidiaries, including Armada Hoffler, L.P., a Virginia limited partnership (the "Operating Partnership"), of which we are the sole general partner.
We generally consider a property to be stabilized upon the earlier of: (i) the quarter after the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy.
We generally consider a property to be stabilized upon the earlier of: (i) the quarter after the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy.
Solis Gainesville II On October 3, 2022, we entered into a $19.6 million preferred equity investment for the development of a multifamily property located in Gainesville, Georgia (Solis Gainesville II). This project is located nearby our recently completed multifamily development project in Gainesville.
Solis Gainesville II On October 3, 2022, we entered into a $19.6 million preferred equity investment for the development of a multifamily property located in Gainesville, Georgia (Solis Gainesville II). This project is located nearby our recently completed multifamily development project in Gainesville, The Everly.
(3) For the properties in our office and retail portfolios, annualized base rent ("ABR") is calculated by multiplying (a) monthly base rent (defined as cash base rent, before contractual tenant concessions and abatements, and excluding tenant reimbursements for expenses paid by us) as of December 31, 2022 for in-place leases as of such date by (b) 12, and does not give effect to periodic contractual rent increases or contingent rental revenue (e.g., percentage rent based on tenant sales thresholds).
(3) For the properties in our retail and office portfolios, annualized base rent ("ABR") is calculated by multiplying (a) monthly base rent (defined as cash base rent, before contractual tenant concessions and abatements, and excluding tenant reimbursements for expenses paid by us) as of December 31, 2023 for in-place leases as of such date by (b) 12, and does not give effect to periodic contractual rent increases or contingent rental revenue (e.g., percentage rent based on tenant sales thresholds).
ABR per leased square foot is calculated by dividing (a) ABR by (b) square footage under in-place leases as of December 31, 2022. In the case of triple net or modified gross leases, our calculation of ABR does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses.
ABR per leased square foot is calculated by dividing (a) ABR by (b) square footage under in-place leases as of December 31, 2023. In the case of triple net or modified gross leases, our calculation of ABR does not include tenant reimbursements for real estate taxes, insurance, common area, or other operating expenses.
The net rentable square footage included in office leases is generally consistent with the Building Owners and Managers Association 1996 measurement guidelines. (2) Occupancy for each of our office and retail properties is calculated as (a) square footage under executed leases as of December 31, 2022, divided by (b) net rentable square feet, expressed as a percentage.
The net rentable square footage included in office leases is generally consistent with the Building Owners and Managers Association 1996 measurement guidelines. (2) Occupancy for each of our retail and office properties is calculated as (a) square footage under executed leases as of December 31, 2023, divided by (b) net rentable square feet, expressed as a percentage.
In addition, all but one of the properties in our portfolio as of December 31, 2022 were located in Maryland, Virginia, North Carolina, South Carolina, Florida and Georgia, which are areas subject to an increased risk of hurricanes.
In addition, all but one of the properties in our portfolio as of December 31, 2023 were located in Maryland, Virginia, North Carolina, South Carolina, Florida and Georgia, which are areas subject to an increased risk of hurricanes.
Such laws require that owners or operators of buildings containing ACBM (and employers in such buildings) properly manage and maintain the asbestos, adequately notify or train those who may come into contact with asbestos, and undertake special precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a building.
Such laws require that owners or operators of buildings containing ACBM (and employers in such buildings) properly manage and maintain the asbestos, adequately notify or train those who may come into contact with asbestos, and undertake special precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a 13 Table of Contents building.
Development Pipeline In addition to the properties in our operating property portfolio as of December 31, 2022, we had the following properties in various stages of development and stabilization.
Development Pipeline In addition to the properties in our operating property portfolio as of December 31, 2023, we had the following properties in various stages of development and stabilization.
They will occupy at least 553,000 square feet of office space. Plans for this development may evolve as the development process proceeds. Project costs at this time are subject to change and currently estimated at $264 million.
They will occupy at least 553,000 square feet of office space. Plans for this development may evolve as the development process proceeds. Project costs at this time are subject to change and currently estimated at $267.4 million.
If we or one or more of our tenants experiences a loss that is uninsured or that exceeds policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties.
If we or one or more of our tenants experiences a loss that is uninsured or that exceeds policy 12 Table of Contents limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties.
However, some of the construction companies with which we compete have different cost structures and greater financial and other resources than we do, which may put them at an advantage when competing with us for construction projects.
However, some of the 14 Table of Contents construction companies with which we compete have different cost structures and greater financial and other resources than we do, which may put them at an advantage when competing with us for construction projects.
Equity Method Investments - Development Equity Method Investments (1) as of December 31, 2022 ($ in '000s) Schedule Estimated Estimated Project Cost Equity requirement Funded to date Initial Stabilized AHH Property Property Location Size Start Occupancy Operation Ownership % Type T.
Equity Method Investments - Development Equity Method Investments as of December 31, 2023 (1) ($ in '000s) Schedule Estimated Estimated Project Cost Equity Requirement Funded to Date Initial Occupancy Stabilized Operation (2) AHH Property Type Property Location Size Start Ownership % T.
If we fail to qualify for taxation as a REIT in any taxable year and do not qualify for certain statutory relief provisions, our income for that year will be taxed at regular corporate rates, and we would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to 11 Table of Contents qualify as a REIT.
If we fail to qualify for taxation as a REIT in any taxable year and do not qualify for certain statutory relief provisions, our income for that year will be taxed at regular corporate rates, and we would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT.
Competition from other construction companies may reduce the number of construction projects that we are hired to complete and increase pricing pressure, either of which could reduce the profitability of our construction business. Human Capital As of December 31, 2022, we had 161 employees.
Competition from other construction companies may reduce the number of construction projects that we are hired to complete and increase pricing pressure, either of which could reduce the profitability of our construction business. Human Capital As of December 31, 2023, we had 164 employees.
Harbor Point Parcel 4 In conjunction with the Harbor Point Parcel 3 project, we acquired a 78% interest in Harbor Point Parcel 4, a real estate venture with Beatty Development Group, for purposes of developing a mixed-use project, which is planned to include 312 apartments units, 13,000 square feet of retail space, and 1,250 spaces of structured parking on a neighboring site to accommodate T.
Harbor Point Parcel 4 In conjunction with the Harbor Point Parcel 3 project, we acquired a 78% interest in Harbor Point Parcel 4, a real estate venture with Beatty Development Group, for purposes of developing a mixed-use project, which is planned to include 312 apartments units, 15,800 square feet of retail space, and 1,252 spaces of structured parking on a neighboring site to accommodate T.
The preferred equity investment has economic and other terms consistent with a note receivable, including a mandatory redemption or maturity on October 3, 2026, and it is accounted for as a note receivable. Our investment bears interest at a rate of 14.0%, compounded annually, with a minimum preferred return of $5.9 million.
The preferred equity investment has economic and other terms consistent with a note receivable, including a mandatory redemption or maturity on October 3, 2026, and it is accounted for as a note receivable. Our investment bears interest at a rate of 14%, compounded annually, with a minimum preferred return of $5.9 million, which represents approximately 24 months of interest.
Equity Method Investments Harbor Point Parcel 3 During December 2020, we formed a 50/50 joint venture that will develop and build T. Rowe Price's new global headquarters in Baltimore's Harbor Point. T. Rowe Price agreed to a 15-year lease and plans to relocate its operations in the second half of 2024 to Harbor Point Parcel 3.
Equity Method Investments Harbor Point Parcel 3 During December 2020, we formed a 50/50 joint venture to develop and build T. Rowe Price's new global headquarters in Baltimore's Harbor Point. T. Rowe Price agreed to a 15-year lease, with three 5-year extension options, and plans to relocate its operations in the second half of 2024 to Harbor Point Parcel 3.
Rowe Price's parking requirements and other parking requirements for the surrounding area. We hold an option to increase our ownership to 90%. We have a current projected equity commitment of $102.6 million relating to this project, of which we had funded $32.4 million as of December 31, 2022. Plans for this project may also evolve as the development process proceeds.
Rowe Price's parking requirements and other parking requirements for the surrounding area. We hold an option to increase our ownership to 90%. We have a current projected equity commitment of $113.3 million relating to this project, of which we had funded $102.1 million as of December 31, 2023. Plans for this project may also evolve as the development process proceeds.
Armada Hoffler is committed to providing each employee with a safe, welcoming, and inclusive work environment and culture that enables them to contribute fully and develop to their highest potential. The Company invests heavily in its employees by providing quality training and learning opportunities; promoting inclusion and diversity; and upholding a high standard of ethics and respect for human rights.
We are committed to providing each employee with a safe, welcoming, and inclusive work environment and culture that enables them to contribute fully and develop to their highest potential. We invest heavily in our employees by providing quality training and learning opportunities; promoting inclusion and diversity; and upholding a high standard of ethics and respect for human rights.
Subsequent to December 31, 2022 On January 14, 2023, we acquired the additional 11% membership interest in the Constellation Energy Building in exchange for full satisfaction of the $12.8 million loan that was extended to the seller upon the acquisition of the property in January 2022.
Acquisitions On January 14, 2023, we acquired an additional 11% membership interest in the Constellation Energy Building, increasing our ownership interest to 90%, in exchange for full satisfaction of the $12.8 million loan that was extended to the seller upon the acquisition of the property in January 2022.
Attracting, developing, and retaining team members is crucial to executing the Company’s strategy. Armada Hoffler offers a comprehensive total rewards program aimed at the varying health, home-life, and financial services.
Attracting, developing, and retaining team members is crucial to executing our strategy. We offer a comprehensive total rewards program aimed at the varying health, home-life, and financial services.
We have a current projected equity commitment of $44.6 million relating to this project, of which we had funded $40.5 million as of December 31, 2022. We provided a completion guarantee to the lender for this project. The construction loan is cross-collateralized with Harbor Point Parcel 4.
We have a current projected equity commitment of $47.0 million relating to this project, of which we had funded $42.9 million as of December 31, 2023. We provided a completion guarantee to the lender for this project. The construction loan is cross-collateralized with Harbor Point Parcel 4.
During the year ended December 31, 2022, we recognized $9.9 million of interest income on the note. See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
See Note 5 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for further information regarding the acquisition. During the year ended December 31, 2023, we recognized $3.6 million of interest income on the note. See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
In addition to the ownership of our operating property portfolio, we develop and build properties for our own account and through joint ventures between us and unaffiliated partners and also invest in development projects through mezzanine lending and preferred equity arrangements. We also provide general contracting services to third parties.
In addition to the ownership of our operating property portfolio, we develop and build properties for our own account and through joint ventures between us and unaffiliated partners and also invest in development projects through real estate financing arrangements. We also provide general construction and development services to third-party clients.
City Park 2 9 Table of Contents On March 23, 2022, we entered into a $20.6 million preferred equity investment for the development of a multifamily property located in Charlotte, North Carolina.
Real Estate Financing Investments Solis City Park II On March 23, 2022, we entered into a $20.6 million preferred equity investment for the development of a multifamily property located in Charlotte, North Carolina.
We are not presently aware of any material adverse indoor air quality issues at our properties. 13 Table of Contents Competition We compete with a number of developers, owners, and operators of office, retail, and multifamily real estate, many of which own properties similar to ours in the same markets in which our properties are located and some of which have greater financial resources than we do.
Competition We compete with a number of developers, owners, and operators of retail, office, and multifamily real estate, many of which own properties similar to ours in the same markets in which our properties are located and some of which have greater financial resources than we do.
The balance on the Solis Gainesville II note was $6.6 million as of December 31, 2022. During the year ended December 31, 2022, we recognized $0.2 million of interest income on the note. See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
During the year ended December 31, 2023, we recognized $2.9 million of interest income on the note. As of December 31, 2023, this note was fully funded and the development property was approximately 41% leased. See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
Our most recent third-party construction contracts have included the mixed-use project The Interlock in Atlanta, Georgia, Boulder Lake Apartments in Chesterfield, Virginia, and 27th Street Hotel in Virginia Beach.
Our most recent third-party construction contracts have included the mixed-use project The Interlock in Atlanta, Georgia, Adams Hill Apartments in Greenville, South Carolina, The Apartments at Innsbrook Square in Glen Allen, Virginia, Fox Crossing Apartments in Raleigh, North Carolina, Boulder Lake Apartments in Chesterfield, Virginia, and 27th Street Hotel in Virginia Beach.
In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants, employees of our tenants, or others if property damage or personal injury occurs.
In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants, employees of our tenants, or others if property damage or personal injury occurs. We are not presently aware of any material adverse indoor air quality issues at our properties.
Other Investments Interlock Commercial On December 21, 2018, we entered into a mezzanine loan agreement with the developer of the office and retail components of The Interlock, a new mixed-use public-private partnership with Georgia Tech in West Midtown Atlanta.
The Interlock On December 21, 2018, we entered into a mezzanine loan agreement with the developer of the office and retail components of The Interlock, a new mixed-use public-private partnership with Georgia Tech in West Midtown Atlanta. The loan had a maximum principal amount of $70.1 million and a total maximum commitment, including accrued interest reserves, of $107.0 million.
As of December 31, 2022, our executive officers and directors collectively owned approximately 12.1% of our company on a fully diluted basis, which we believe aligns their interests with those of our stockholders. • Strategic Focus on Attractive Mid-Atlantic and Southeastern Markets.
As of December 31, 2023, our executive officers and directors collectively held a stake of approximately 12.2% in our company on a fully diluted basis, which we believe aligns their interests with those of our stockholders. • Armada Hoffler strategically focuses on target markets in the Mid-Atlantic and Southeastern regions of the United States.
Rowe Price Global HQ Baltimore, MD 553,000 sf office / 20,200 sf retail / 250 parking spaces 264,000 44,600 40,500 2Q22 3Q24 3Q24 50% Office Parcel 4 Mixed-Use Baltimore, MD 312 units / 12,100 sf retail / 1,250 parking spaces 226,000 102,600 32,400 2Q22 3Q24 2Q26 90% Mixed-use Total $ 490,000 $ 147,200 $ 72,900 ________________________________________ (1) All items in the table (other than funded to date as of December 31, 2022) are estimates that may change as the development and redevelopment process proceeds.
Rowe Price Global HQ (Harbor Point Parcel 3) Baltimore, MD 553,000 sf office / 20,200 sf retail / 250 parking spaces $ 267,400 $ 47,000 $ 42,900 2Q22 3Q24 4Q24 50% Office Allied | Harbor Point (Harbor Point Parcel 4) Baltimore, MD 312 units / 15,800 sf retail / 1,252 parking spaces 236,800 113,300 102,100 2Q22 3Q24 2Q26 90% (3) Mixed-use Total $ 504,200 $ 160,300 $ 145,000 ________________________________________ (1) All items in the table (other than location, funded to date as of December 31, 2023, development start, our ownership percentage and property type) are estimates that may change as the development and redevelopment process proceeds.
We seek to achieve our objectives through the following strategies: • Pursue a Disciplined, Opportunistic Development and Acquisition Strategy Focused on Office, Retail, and Multifamily Properties . We intend to continue to grow our asset base through the selective acquisition of high-quality properties that are well-located in their submarkets, and continued strategic development of office, retail, and multifamily properties.
We seek to achieve our objectives through the following strategies: • Armada Hoffler intends to continue to grow our asset base and create value through the selective acquisition of high-quality properties that are well-located in their submarkets, and continued strategic development of retail, office, and multifamily properties. • Armada Hoffler intends to continue to use our real estate financing program which is integrated into our overall growth and acquisition strategy.
(7) For the properties in our multifamily portfolio, annualized quarterly rent ("AQR") is calculated by multiplying (a) revenue for the quarter ended December 31, 2022 by (b) 4.
The rent paid by us is eliminated in the consolidated financial statements in accordance with U.S. generally accepted accounting principles ("GAAP"). (7) For the properties in our multifamily portfolio, annualized quarterly rent ("AQR") is calculated by multiplying (a) revenue for the quarter ended December 31, 2023 by (b) 4.
Development, Not Delivered ($ in '000s) Schedule (1) Estimated Estimated Incurred Initial Stabilized AHH Property Type Property Location Size (1) Cost (1) Cost Start Occupancy Operation (2) Ownership % Southern Post Roswell, GA 137 units/137,000 sf $ 119,000 $ 47,000 4Q21 4Q23 4Q24 100% Mixed-use Delivered Not Stabilized ($ in '000s) Schedule Estimated Estimated Incurred Initial Stabilized AHH Property Type Property Location Size (1) Cost (1) Cost Start Occupancy Operation (1)(2) Ownership % Chronicle Mill Belmont, NC 238 units/14,900 sf $ 60,000 $ 54,000 1Q21 4Q22 1Q23 85% Multifamily Total $ 179,000 $ 101,000 ________________________________________ 8 Table of Contents (1) Represents estimates that may change as the development/stabilization process proceeds.
Development, Not Delivered ($ in '000s) Schedule (1) Estimated Estimated Funded Initial Stabilized AHH Property Type Property Location Size (1) Cost (1) to Date Start Occupancy Operation (2) Ownership % Southern Post Roswell, GA 137 units/137,000 sf $ 126,300 $ 82,900 4Q21 1Q24 4Q24 100% Mixed-use Redevelopment AHH Property Type Property Location Ownership % Columbus Village II Virginia Beach, VA 100% Retail ________________________________________ 8 Table of Contents (1) Represents estimates that may change as the development/stabilization process proceeds.
Current estimated project costs are $226 million. We will be expected to provide a completion guarantee and a partial payment guarantee to the lender for this project. The construction loan is cross-collateralized with Harbor Point Parcel 3.
Current estimated project costs are $236.8 million. We have provided a completion guarantee and a partial payment guarantee to the lender for this project. The construction loan is cross-collateralized with Harbor Point Parcel 3. As of December 31, 2023, no amounts have been funded on this senior loan.
Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such contamination, and the liability may be joint and several.
Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such contamination, and the liability may be joint and several. These liabilities could be substantial, and the cost of any required remediation, removal, fines, or other costs could exceed the value of the property and our aggregate assets.
(4) We lease all or a portion of the land underlying this property pursuant to a ground lease. (5) As of December 31, 2022, we occupied 55,390 square feet at these two properties at an ABR of $1.8 million, or $33.32 per leased square foot, which amounts are reflected in this table.
(5) We are entitled to a preferred return on our investment in this property. 5 Table of Contents (6) As of December 31, 2023, we occupied 47,644 square feet at these two properties at an ABR of $1.6 million, or $33.8 per leased square foot, which amounts are reflected in this table.
During the year ended December 31, 2022, we recognized $1.0 million of interest income on the note. See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
The information on, or accessible through, our website is not incorporated into and does not constitute a part of this Annual Report on Form 10-K or any other report or document we file with or furnish to the SEC. 14 Table of Contents Available Information We file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports with the SEC.
The telephone number for our principal executive office is (757) 366-4000. We maintain a website located at ArmadaHoffler.com. The information on, or accessible through, our website is not incorporated into and does not constitute a part of this Annual Report on Form 10-K or any other report or document we file with or furnish to the SEC.
The investment has economic terms consistent with a note receivable, including a mandatory redemption or maturity on April 28, 2026, and it is accounted for as a note receivable. The Company's investment bears interest at a rate of 13%, compounded annually. The balance on the City Park 2 note was $19.1 million as of December 31, 2022.
The investment has economic terms consistent with a note receivable, including a mandatory redemption or maturity on April 28, 2026, and it is accounted for as a note receivable.
We intend to opportunistically divest properties when we believe returns have been maximized and to redeploy the capital into new development, acquisition, repositioning, or redevelopment projects that are expected to generate higher potential risk-adjusted returns. 4 Table of Contents Our Properties The table below sets forth certain information regarding our stabilized portfolio as of December 31, 2022.
We intend to continue to leverage our construction business and other third-party services. • Armada Hoffler plans to continue to leverage our extensive experience in completing large, complex, mixed-use projects to establish relationships with new partners, while expanding our relationships with existing partners. • Armada Hoffler opportunistically divests properties when we believe returns have been maximized and we believe redeploying the capital into new development, acquisition, repositioning, or redevelopment projects will generate higher potential risk-adjusted returns. 3 Table of Contents Our Properties The table below sets forth certain information regarding our stabilized portfolio as of December 31, 2023.
We are 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 primarily throughout the Mid-Atlantic and Southeastern United States.
We are a vertically-integrated, self-managed REIT 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.
In addition, we have a construction office located at 1300 Thames Street, Suite 30, Baltimore, Maryland 21231 in Thames Street Wharf at Harbor Point. The telephone number for our principal executive office is (757) 366-4000. We maintain a website located at ArmadaHoffler.com.
Corporate Information Our principal executive office is located at 222 Central Park Avenue, Suite 2100, Virginia Beach, Virginia 23462 in the Armada Hoffler Tower at the Town Center of Virginia Beach. In addition, we have a construction office located at 1300 Thames Street, Suite 30, Baltimore, Maryland 21231 in Thames Street Wharf at Harbor Point.
(8) The AQR for Liberty, Cosmopolitan, Edison Apartments, and 1405 Point excludes approximately $0.2 million, $1.0 million, $0.3million, and $0.4 million, respectively, from ground floor retail leases. 6 Table of Contents Lease Expirations The following tables summarize the scheduled expirations of leases in our office and retail operating property portfolios as of December 31, 2022.
(8) The AQR for The Cosmopolitan, 1405 Point, Chronicle Mill, The Edison, and Liberty Apartments excludes approximately $1.2 million, $0.3 million, $0.2 million, $0.1 million, and $0.2 million, respectively, from ground floor retail leases.
We believe that we have a unique advantage over many of our competitors due to our integrated construction and development business that provides expertise, oversight, and a broad array of client-focused services. We intend to continue to conduct and grow our construction business and other third-party services by pursuing new clients and expanding our relationships with existing clients.
We continue to evaluate whether properties within our real estate financing program provide high-quality acquisition opportunities. • Armada Hoffler believes that we have a unique advantage over many of our competitors due to our integrated construction and development business that provides expertise, oversight, and a broad array of client-focused services.
Additional information regarding Armada Hoffler’s activities related to its people and sustainability, as well as its workforce diversity data, can be found in Armada Hoffler’s latest Sustainability Report, which is located on its website at https://armadahoffler.com/sustainability/. The Sustainability Report is updated periodically. This website address is intended to be an inactive textual reference only.
Additionally, we invest in developing employees through programs such as the High-Performance Leadership program, to help ensure they have a strong pipeline of future leaders. Additional information regarding our activities related to our people and sustainability, as well as our workforce diversity data, can be found in our latest Sustainability Report, which is located on our website at https://armadahoffler.com/sustainability/.
Retail Lease Expirations Year of Lease Expiration Number of Leases Expiring Square Footage of Leases Expiring % Portfolio Net Rentable Square Feet ABR % of Retail Portfolio ABR Available — 83,600 2.1 % $ — — % Month-to-Month 4 51,737 1.3 % 340,578 0.5 % 2022 (1) 1 1,200 — % 37,818 0.1 % 2023 47 183,357 4.7 % 4,127,714 5.8 % 2024 85 420,397 10.7 % 7,990,879 11.3 % 2025 94 501,116 12.8 % 8,817,185 12.4 % 2026 82 450,350 11.5 % 9,049,900 12.8 % 2027 75 470,148 12.0 % 8,741,304 12.3 % 2028 46 246,109 6.3 % 4,953,704 7.0 % 2029 31 115,967 3.0 % 2,465,625 3.5 % 2030 46 260,461 6.7 % 5,818,903 8.2 % 2031 30 271,334 6.9 % 4,894,065 6.9 % 2032 24 289,109 7.4 % 4,670,093 6.6 % Thereafter 33 571,116 14.6 % 9,018,015 12.6 % Total / Weighted Average 598 3,916,001 100.0 % $ 70,925,783 100.0 % (1) Lease expired on December 31, 2022. 7 Table of Contents Tenant Diversification The following table lists the 20 largest tenants in each of our office and retail operating property portfolios, based on ABR as of December 31, 2022 ($ in thousands): Tenant (1) Number of Leases Lease Expiration ABR % of Total ABR/AQR Constellation Energy Group 1 2036 $ 14,575 8.0 % Morgan Stanley 3 2028-2035 7,178 3.9 % Harris Teeter/Kroger 6 2026-2035 3,766 2.1 % Canopy by Hilton 1 2045 2,846 1.6 % Clark Nexsen 1 2029 2,801 1.5 % WeWork 1 2034 2,180 1.2 % Lowes Foods 2 2037;2039 1,976 1.1 % Franklin Templeton 1 2038 1,861 1.0 % Duke University 1 2029 1,659 0.9 % Huntington Ingalls Industries 1 2029 1,606 0.9 % Dick's Sporting Goods 1 2032 1,553 0.9 % PetSmart 5 2025-2027 1,527 0.8 % TJ Maxx/Homegoods 5 2023-2027 1,519 0.8 % Mythics 1 2030 1,260 0.7 % Johns Hopkins Medicine 1 2023 1,213 0.7 % Amazon/Whole Foods 1 2040 1,144 0.6 % Ross Dress for Less 3 2025-2027 1,122 0.6 % Apex Entertainment 1 2035 1,092 0.6 % Bed Bath & Beyond 2 2025 ; 2027 1,084 0.6 % Regal Cinemas 2 MTM ; 2024 1,058 0.6 % Top 20 Total $ 53,020 29.1 % (1) Excludes leases from development and redevelopment properties that have been delivered but are not yet stabilized.
The spaces were available for lease as of January 1, 2024. 7 Table of Contents Tenant Diversification The following table lists the 20 largest tenants in our retail and office operating property portfolios, based on ABR as of December 31, 2023 ($ in thousands): Tenant (1) Number of Leases Lease Expiration ABR % of Total ABR/AQR Constellation Energy Generation 1 2036 $ 15,010 7.5 % Morgan Stanley 3 2028 - 2035 8,733 4.3 % Harris Teeter/Kroger 6 2026 - 2035 3,781 1.9 % WeWork (2) 2 2023 ; 2034 3,732 1.9 % Canopy by Hilton 1 2045 3,171 1.6 % Clark Nexsen 1 2029 2,857 1.4 % Lowes Foods 2 2037 ; 2039 1,976 1.0 % Franklin Templeton 1 2038 1,861 0.9 % Duke University 1 2029 1,700 0.8 % Huntington Ingalls Industries 1 2029 1,638 0.8 % Dick’s Sporting Goods 1 2032 1,553 0.8 % TJ Maxx/Homegoods 5 2025 - 2029 1,531 0.8 % PetSmart 5 2025 - 2027 1,527 0.8 % Georgia Tech 1 2031 1,418 0.7 % Mythics 1 2030 1,285 0.6 % Puttshack 1 2036 1,203 0.6 % Amazon/Whole Foods 1 2040 1,144 0.6 % Pindrop 1 2027 1,137 0.6 % Apex Entertainment 1 2035 1,134 0.6 % Kimley-Horn 1 2027 1,123 0.6 % Top 20 Total $ 57,514 28.8 % ________________________________________ (1) Excludes leases from development and redevelopment properties that have been delivered but are not yet stabilized.
For definitions and discussion of FFO, Normalized FFO, NOI, and same store NOI, see the section below entitled "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations." 2 Table of Contents Our Competitive Strengths We believe that we distinguish ourselves from other REITs through the following competitive strengths: • High-Quality, Diversified Portfolio .
Management’s Discussion and Analysis of Financial Condition and Results of Operations." Our Competitive Strengths Armada Hoffler believes that we distinguish ourselves from other REITs through the following competitive strengths: • Armada Hoffler's diversified portfolio consists of high-quality retail, office, and multifamily assets, located primarily in the Mid-Atlantic and Southeastern regions.
You may obtain copies of these documents by accessing the SEC’s website at www.sec.gov.
Available Information We file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports with the SEC. You may obtain copies of these documents by accessing the SEC’s website at www.sec.gov.
Our Business and Growth Strategies Our primary business objectives are to: (i) continue to develop, build, and own class A office, retail, and multifamily properties in our target markets, (ii) finance and operate our portfolio in a manner that increases cash flow and property values, (iii) execute new third-party construction work with consistent operating margins, and (iv) pursue selective acquisition opportunities, particularly when the acquisition involves a significant redevelopment aspect.
We believe that our longstanding presence in our target markets provides us with significant advantages in sourcing and executing development opportunities, identifying and mitigating potential risks, and negotiating attractive pricing. • Armada Hoffler leverages mezzanine lending and preferred equity arrangements, which provides opportunities to acquire completed development projects at prices that are below market or at cost and may enable us to realize profit on projects we do not intend to own. • Our platform consists of asset management, development, and construction expertise, which comprise an integrated delivery system for every project that we build for our portfolio or for third-party clients. 2 Table of Contents Our Business and Growth Strategies Armada Hoffler's primary business objectives are to: (i) continue to acquire, manage, develop, and build class A retail, office, and multifamily properties in our target markets, (ii) finance and operate our portfolio in a manner that increases cash flow and property values, (iii) pursue selective acquisition and disposition opportunities , and (iv) execute new third-party construction and real estate financing arrangements with consistent operating margins.
We received a total of $28.9 million, which consisted of $22.3 million outstanding principal, $3.9 million of accrued interest, and a prepayment premium of $2.7 million that resulted from the early payoff of the loan. See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K. The Allure at Edinburgh On July 26, 2023, we entered into a $9.2 million preferred equity investment for the development of a multifamily property located in Chesapeake, Virginia ("The Allure at Edinburgh").
None of the information on, or accessible through, Armada Hoffler’s website is part of this Form 10-K or is incorporated by reference herein. Corporate Information Our principal executive office is located at 222 Central Park Avenue, Suite 2100, Virginia Beach, Virginia 23462 in the Armada Hoffler Tower at the Town Center of Virginia Beach.
The Sustainability Report is updated periodically. This website address is intended to be an inactive textual reference only. None of the information on, or accessible through, our website is part of this Form 10-K or is incorporated by reference herein.
As of December 31, 2022, we owned, through a combination of direct and indirect interests, 76.7% of the common units of limited partnership interest in our Operating Partnership ("OP Units"). 2022 and Recent Highlights The following highlights our results of operations and significant transactions for the year ended December 31, 2022: • Net income attributable to common stockholders and OP Unitholders of $82.5 million, or $0.93 per diluted share, compared to $13.9 million, or $0.17 per diluted share, for the year ended December 31, 2021. • Funds from operations attributable to common stockholders and OP Unitholders ("FFO") of $106.6 million, or $1.21 per diluted share, compared to $85.4 million, or $1.05 per diluted share, for the year ended December 31, 2021, representing a 15% year-over-year increase. • Normalized funds from operations attributable to common stockholders and OP Unitholders ("Normalized FFO") of $107.2 million, or $1.22 per diluted share, compared to $87.6 million, or $1.08 per diluted share, for the year ended December 31, 2021, representing a 13% year-over-year increase. • Property segment net operating income ("NOI") of $146.5 million, which represents an 18.3% increase compared to $123.8 million for the year ended December 31, 2021: • Office NOI of $47.7 million compared to $28.8 million • Retail NOI of $63.7 million compared to $57.6 million • Multifamily NOI of $35.1 million compared to $37.3 million • Same store NOI of $108.7 million, which represents a 5.6% increase compared to $102.9 million for the year ended December 31, 2021: • Office same store NOI of $26.4 million compared to $26.5 million • Retail same store NOI of $55.0 million compared to $51.6 million • Multifamily same store NOI of $27.2 million compared to $24.8 million 1 Table of Contents • Stabilized portfolio occupancy at 97.0% as of December 31, 2022 compared to 96.7% as of December 31, 2021: • Office occupancy at 96.7% compared to 96.8% • Retail occupancy at 97.9% compared to 96.0% • Multifamily occupancy at 96.1% compared to 97.4% • Completed the acquisition of the Class A+ mixed-use Constellation Energy Building in Baltimore's Harbor Point.
As of December 31, 2023, we owned, through a combination of direct and indirect interests, 75.6% of the common units of limited partnership interest in our Operating Partnership ("OP Units"). 2023 and Recent Highlights The following highlights our results of operations and significant transactions for the year ended December 31, 2023: • Net loss attributable to common stockholders and OP Unitholders of $4.5 million for the year ended December 31, 2023, or $0.05 per diluted share. • Funds from operations attributable to common stockholders and OP Unitholders ("FFO") of $90.7 million for the year ended December 31, 2023, or $1.02 per diluted share. • Normalized funds from operations attributable to common stockholders and OP Unitholders ("Normalized FFO") of $110.5 million, or $1.24 per diluted share. • Announced that the Board of Directors declared a cash dividend of $0.205 per common share, representing a 5% increase over the prior quarter's dividend. • Dividends declared during the year ended December 31, 2023 of $0.775 per share, representing a 7.6% year-over-year increase. • As part of the Company's leadership succession planning initiatives, appointed Shawn Tibbetts to President, in addition to his existing role as Chief Operating Officer.
The investment had economic terms consistent with a note receivable, including a mandatory redemption or maturity on October 1, 2026, and it is accounted for as a note receivable in our consolidated balance sheets. This investment bore interest at a rate of 11%, compounded annually. On December 30, 2022, the borrower paid off the Nexton Multifamily note receivable in full.
Solis Kennesaw On May 25, 2023, we entered into a $37.9 million preferred equity investment for the development of a multifamily property located in Marietta, Georgia. The investment has economic terms consistent with a note receivable, including a mandatory redemption or maturity on May 25, 2027, and it is accounted for as a note receivable.
Removed
The building features 444,000 square feet of Class A office space, 103 multifamily units, 38,500 square feet of retail space, and 750 parking spaces, which complements the Company's Harbor Point portfolio and development.
Added
The Company's Board of Directors also endorsed founder and current Chairman Dan Hoffler's intent to relinquish his role as Chairman of the Board of Directors in June 2024. The Board of Directors expects to appoint Louis S.
Removed
In January 2022, the Company raised $58.0 million at $14.45 per share through an underwritten common stock offering in conjunction with this acquisition. • Amended the Company’s Bylaws to relax the requirements necessary for stockholders to submit binding proposals. • Appointed Matthew Barnes-Smith as Chief Financial Officer in accordance with the Company’s strategic succession plan.
Added
Haddad as Chairman of the Board of Directors, subject to his reelection to the Board of Directors at the 2024 Annual Meeting of Stockholders. If the stockholders vote to reelect Mr. Hoffler to the Board of Directors at the 2024 Annual Meeting of Stockholders, Mr.
Removed
Former Chief Financial Officer, Michael O'Hara was a key contributor to the Company for over 25 years and continued with the Company through the end of 2022 to facilitate an orderly transition of his responsibilities to Mr.
Added
Hoffler will continue to serve as a member of the Board of Directors, and the Board of Directors expects to appoint him as "Chairman Emeritus". 1 Table of Contents • Property segment net operating income ("NOI") of $160.1 million for the year ended December 31, 2023, which represents a 9.3% increase compared to $146.5 million for the year ended December 31, 2022. • Same Store NOI for the year ended December 31, 2023 increased 0.9% compared to the year ended December 31, 2022. • For the year ended December 31, 2023, the Company repurchased 1,204,838 shares of common stock for a total of $12.6 million. • Completed the $215 million acquisition of The Interlock, a 311,000 square foot Class A commercial mixed-use asset in Atlanta's West Midtown anchored by Georgia Tech. • Announced the authorization of the repurchase of up to $50 million of the Company's shares of common stock and Series A Preferred Stock under a newly established share repurchase program.
Removed
Barnes-Smith and oversee the Company’s major investments at Harbor Point. • In April, completed the disposition of two student housing assets in Charleston for $81 million. • Completed $177 million of sales of noncore assets • The Residences at Annapolis Junction in Baltimore for $150 million • Two outparcels at North Pointe in Durham, North Carolina for $23.9 million • Two outparcels at Sandbridge Commons in Virginia Beach for $3.5 million • Appointed Dennis H.
Added
During the year ended December 31, 2023, the Company repurchased 1,204,838 shares of common stock for a total of $12.6 million. • Committed an aggregate of $75.5 million to new real estate financing investments across three ground-up multifamily development projects located in the Atlanta and Coastal Virginia markets. • Third-party construction backlog as of December 31, 2023 was $472.2 million and general contracting and real estate services gross profit for the year ended December 31, 2023 was $13.4 million. • Weighted average stabilized portfolio occupancy was 96.1% as of December 31, 2023.
Removed
Gartman, renowned investor, economist, and longtime publisher of “The Gartman Letter,” as a member of our board of directors. He is the sixth independent member. • Executed a new office lease with Franklin Templeton for 60,000 square feet at the Company’s Wills Wharf office building in Baltimore’s Harbor Point neighborhood.
Added
Retail occupancy was 97.4%, office occupancy was 95.3%, and multifamily occupancy was 95.5%. For definitions and discussion of FFO, Normalized FFO, NOI, and Same Store NOI, see the section below entitled "Item 7.
Removed
The investment management firm has agreed to lease the entire fifth floor and a portion of the fourth floor of Wills Wharf and will bring the building to 91% occupancy. • Amended and restated our $355 million unsecured credit facility to increase the borrowing capacity to $550 million, with an option to expand to $1.0 billion (subject to certain conditions), and extend the maturity date of the revolving line of credit and term loan components to 2027 and 2028, respectively. • Executed a new 46,000 square foot lease with Morgan Stanley at Thames Street Wharf that expands the tenant's space to over 240,000 square feet and extends their lease term to 2035. • Delivered Chronicle Mill, a 238-unit market rate apartment project in the Charlotte suburb of Belmont, North Carolina.
Added
Our properties are generally in the top tier of commercial properties in their markets, many of which are in mixed-use communities that offer Class-A amenities and finishes. • Armada Hoffler has an experienced, dedicated, and resilient senior management team that serves as the catalyst for the organization's success, inspiring employees, driving innovation, and creating value for all stakeholders.
Removed
As of December 31, 2022, Chronicle Mill was already 93% leased. • Reinvested $26.5 million of disposition proceeds to acquire Pembroke Square, a 100% leased grocery-anchored retail property located adjacent to the Town Center of Virginia Beach. • Closed on a new $100 million unsecured term loan, with an option to expand to $200 million, subject to certain conditions, that matures in January 2027 and bears interest at term Secured Overnight Financing Rate ("SOFR") plus margin, with an effective fixed rate of 4.80% after considering the effect of interest rate swaps.
Added
Our senior management team brings substantial experience in strategic business operations, as well as ownership, management, and development of high-quality real estate properties.
Removed
The proceeds were used to repay mortgage debt secured by Wills Wharf and certain retail assets at the Town Center of Virginia Beach. • Entered into an additional interest rate swap agreement covering $100 million of indebtedness on the senior unsecured term loan facility, resulting in an effective fixed interest rate of 4.73%.
Added
These markets demonstrate attractive fundamentals driven by favorable supply and demand characteristics, high-barrier to entry, and limited competition.
Removed
Our portfolio consists of institutional-grade, premier office, retail, and multifamily properties located primarily in the Mid-Atlantic and Southeastern regions. Our properties are generally in the top tier of commercial properties in their markets, many in master planned communities, and offer Class-A amenities and finishes. • Seasoned, Committed, and Aligned Senior Management Team with a Proven Track Record.
Added
(4) We lease all or a portion of the land underlying this property pursuant to a ground lease.
Removed
Our senior management team has extensive experience developing, constructing, owning, operating, renovating, and financing institutional-grade office, retail, and multifamily properties in the Mid-Atlantic and Southeastern regions.
Added
(9) Due to tenants vacating subsequent to December 31, 2023 as a result of flooding at the property, occupancy subsequent to December 31, 2023 at this property is approximately 78.5%. (10) Formerly known as Gainesville Apartments. Lease Expirations The following tables summarize the scheduled expirations of leases in our retail and office operating property portfolios as of December 31, 2023.
Removed
We focus our activities on our target markets in the Mid-Atlantic and Southeastern regions of the United States that demonstrate attractive fundamentals driven by favorable supply and demand characteristics and limited competition from other large, well-capitalized operators.
Added
The information in the following tables does not assume the exercise of any renewal options.
Removed
We believe that our longstanding presence in our target markets provides us with significant advantages in sourcing and executing development opportunities, identifying and mitigating potential risks, and negotiating attractive pricing. • Extensive Experience with Construction and Development.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

103 edited+14 added−19 removed286 unchanged
Biggest changeWhile we have the ability to provide a wide range of development and construction services, any adverse economic or real estate developments in the Mid-Atlantic region could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations. 26 Table of Contents There can be no assurance that all of the projects for which our construction business is engaged as general contractor will be commenced or completed in their entirety in accordance with the anticipated cost, or that we will achieve the financial results we expect from the construction of such properties, which could materially and adversely affect our results of operations, cash flow, and growth prospects.
Biggest changeThere can be no assurance that all of the projects for which our construction business is engaged as general contractor will be commenced or completed in their entirety in accordance with the anticipated cost, or that we will achieve the financial results we expect from the construction of such properties, which could materially and adversely affect our results of operations, cash flow, and growth prospects. 26 Table of Contents For serving as general contractor, our construction business earns profit equal to the difference between the total construction fees that we charge and the costs that we incur to build a property.
We may be unable to identify and complete development opportunities and acquisitions of properties that meet our investment criteria, which may materially and adversely affect our results of operations, cash flow, and growth prospects. Our business and growth strategy involves the development and selective acquisition of office, retail, and multifamily properties.
We may be unable to identify and complete development opportunities and acquisitions of properties that meet our investment criteria, which may materially and adversely affect our results of operations, cash flow, and growth prospects. Our business and growth strategy involves the development and selective acquisition of retail, office, and multifamily properties.
We cannot assure you that these markets will grow or that underlying real estate fundamentals will be favorable to owners and operators of office, retail, or multifamily properties. Our operations may also be adversely affected if competing properties are built in these markets. Moreover, submarkets within any of our target markets may be dependent upon a limited number of industries.
We cannot assure you that these markets will grow or that underlying real estate fundamentals will be favorable to owners and operators of retail, office, or multifamily properties. Our operations may also be adversely affected if competing properties are built in these markets. Moreover, submarkets within any of our target markets may be dependent upon a limited number of industries.
Any adverse economic or real estate developments in our markets, or any decrease in demand for office, retail or multifamily space resulting from the regulatory environment, business climate or energy or fiscal problems, could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to satisfy our debt service obligations.
Any adverse economic or real estate developments in our markets, or any decrease in demand for retail, office, or multifamily space resulting from the regulatory environment, business climate or energy or fiscal problems, could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to satisfy our debt service obligations.
Tenant demand in our office portfolio may decline due to disruptions to the office sector, which could materially and adversely affect us. Companies have been increasing their utilization of shared office spaces, co-working spaces, telecommuting, flexible work schedules, work-from-home alternatives and videoconferencing.
Tenant demand in our office portfolio may decline due to disruptions to the office sector, which could materially and adversely affect us. Companies have been increasing their utilization of work-from-home alternatives, videoconferencing, shared office spaces, co-working spaces, telecommuting, and flexible work schedules.
The theft, destruction, loss, or release of sensitive and confidential information or operational downtime of the systems used to store and transmit our or our tenants’ confidential business information could result in disruptions to our business, negative publicity, brand damage, violation of privacy laws, financial liability, difficulty attracting and retaining tenants, loss of business partners, and loss of business opportunities, any of which may materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
The theft, destruction, loss, or release of sensitive and confidential information or operational downtime of the systems used to store and transmit our or our tenants’ confidential business and personal information could result in disruptions to our business, negative publicity, brand damage, violation of privacy laws, financial liability, difficulty attracting and retaining tenants, loss of business partners, and loss of business opportunities, any of which may materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
Our credit facility contains customary negative covenants and other financial and operating covenants that, among other things: • restrict our ability to incur additional indebtedness; • restrict our ability to incur additional liens; • restrict our ability to make certain investments (including certain capital expenditures); • restrict our ability to merge with another company; • restrict our ability to sell or dispose of assets; • restrict our ability to make distributions to our stockholders; and • require us to satisfy minimum financial coverage ratios, minimum tangible net worth requirements, and maximum leverage ratios.
Our amended credit facility contains customary negative covenants and other financial and operating covenants that, among other things: • restrict our ability to incur additional indebtedness; • restrict our ability to incur additional liens; • restrict our ability to make certain investments (including certain capital expenditures); • restrict our ability to merge with another company; • restrict our ability to sell or dispose of assets; • restrict our ability to make distributions to our stockholders; and • require us to satisfy minimum financial coverage ratios, minimum tangible net worth requirements, and maximum leverage ratios.
Individuals currently considered key personnel each has a national or regional industry reputation that attracts business and investment opportunities and assists us in negotiations with lenders, existing and potential tenants, and industry personnel, and we have not currently entered into employment agreements with any of these individuals. If we lose their services, our relationships with such industry personnel could diminish.
Individuals currently considered key personnel each have a national or regional industry reputation that attracts business and investment opportunities and assists us in negotiations with lenders, existing and potential tenants, and industry personnel, and we have not currently entered into employment agreements with any of these individuals. If we lose their services, our relationships with such industry personnel could diminish.
Our ability to pay expected dividends to our stockholders depends on our ability to generate revenues in excess of expenses, scheduled principal payments on debt, and capital expenditure requirements. Events and conditions generally applicable to owners and operators of real property that are beyond our control may decrease cash available for distribution and the value of our properties.
Our ability to pay expected dividends to our stockholders depends on our ability to generate revenues in excess of expenses, scheduled principal and interest payments on debt, and capital expenditure requirements. Events and conditions generally applicable to owners and operators of real property that are beyond our control may decrease cash available for distribution and the value of our properties.
Foreclosures could also trigger our tax indemnification obligations under the terms of our tax protection agreements with respect to the sales of certain properties. Our credit facility restricts our ability to engage in certain business activities, including our ability to incur additional indebtedness, make capital expenditures, and make certain investments.
Foreclosures could also trigger our tax indemnification obligations under the terms of our tax protection agreements with respect to the sales of certain properties. Our amended credit facility restricts our ability to engage in certain business activities, including our ability to incur additional indebtedness, make capital expenditures, and make certain investments.
Such conditions may materially and adversely affect us as a result of the following potential consequences, among others: • decreased demand for office, retail and multifamily space, which would cause market rental rates and property values to be negatively impacted; • reduced values of our properties may limit our ability to dispose of assets at attractive prices or obtain debt financing secured by our properties and may reduce the availability of unsecured loans; • our ability to obtain financing on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from our acquisition and development activities, and increase our future debt service expense; and • one or more lenders under our credit facility could refuse to fund their financing commitment to us or could otherwise fail to do so, and we may not be able to replace the financing commitment of any such lenders on favorable terms or at all.
Such conditions may materially and adversely affect us as a result of the following potential consequences, among others: • decreased demand for retail, office, and multifamily space, which would cause market rental rates and property values to be negatively impacted; • reduced values of our properties may limit our ability to dispose of assets at attractive prices or obtain debt financing secured by our properties and may reduce the availability of unsecured loans; • our ability to obtain financing on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from our acquisition and development activities, and increase our future debt service expense; and • one or more lenders under our amended credit facility (as defined below) could refuse to fund their financing commitment to us or could otherwise fail to do so, and we may not be able to replace the financing commitment of any such lenders on favorable terms or at all.
We engage in development and redevelopment activities and will be subject to the following risks associated with such activities: 16 Table of Contents • unsuccessful development or redevelopment opportunities could result in direct expenses to us and cause us to incur losses; • construction or redevelopment costs of a project may exceed original estimates, possibly making the project less profitable than originally estimated, or unprofitable; • the inability to obtain or delays in obtaining necessary governmental or quasi-governmental permits and authorizations could result in increased costs or abandonment of the project if necessary permits or authorizations are not obtained; • delayed construction may give tenants the right to terminate pre-development leases, which may adversely impact the financial viability of the project; • occupancy rates, rents and concessions of a completed project may fluctuate depending on a number of factors and may not be sufficient to make the project profitable; and • the availability and pricing of financing to fund our development activities on favorable terms or at all may result in delays or even abandonment of certain development activities.
We engage in development and redevelopment activities and will be subject to the following risks associated with such activities: • unsuccessful development or redevelopment opportunities could result in direct expenses to us and cause us to incur losses; • construction or redevelopment costs of a project may exceed original estimates, possibly making the project less profitable than originally estimated, or unprofitable; • the inability to obtain or delays in obtaining necessary governmental or quasi-governmental permits and authorizations could result in increased costs or abandonment of the project if necessary permits or authorizations are not obtained; • delayed construction may give tenants the right to terminate pre-development leases, which may adversely impact the financial viability of the project; • occupancy rates, rents and concessions of a completed project may fluctuate depending on a number of factors and may not be sufficient to make the project profitable; and • the availability and pricing of financing to fund our development activities on favorable terms or at all may result in delays or even abandonment of certain development activities.
In addition, our credit facility may contain specific cross-default provisions with respect to specified other indebtedness, giving the lenders the right, in certain circumstances, to declare a default if we are in default under other loans.
In addition, our amended credit facility may contain specific cross-default provisions with respect to specified other indebtedness, giving the lenders the right, in certain circumstances, to declare a default if we are in default under other loans.
In addition, these loans may have higher loan-to-value ratios than conventional mortgage loans, with little or no equity invested by the borrower, increasing the risk of loss of principal.
In addition, these investments may have higher "loan-to-value" ratios than conventional mortgage loans, with little or no equity invested by the borrower, increasing the risk of loss of principal.
These provisions include, among others: • redemption rights; • a requirement that we may not be removed as the general partner of our Operating Partnership without our consent; • transfer restrictions on OP Units; • our ability, as general partner, in some cases, to amend the partnership agreement and to cause the Operating Partnership to issue units with terms that could delay, defer, or prevent a merger or other change of control of us or our Operating Partnership without the consent of the limited partners; and • the right of the limited partners to consent to direct or indirect transfers of the general partnership interest, including as a result of a merger or a sale of all or substantially all of our assets, in the event that such transfer requires approval by our common stockholders.
These provisions include, among others: • redemption rights; • a requirement that we may not be removed as the general partner of our Operating Partnership without our consent; 33 Table of Contents • transfer restrictions on OP Units; • our ability, as general partner, in some cases, to amend the partnership agreement and to cause the Operating Partnership to issue units with terms that could delay, defer, or prevent a merger or other change of control of us or our Operating Partnership without the consent of the limited partners; and • the right of the limited partners to consent to direct or indirect transfers of the general partnership interest, including as a result of a merger or a sale of all or substantially all of our assets, in the event that such transfer requires approval by our common stockholders.
Our use of units in our Operating Partnership as consideration to acquire properties could result in stockholder dilution or limit our ability to sell such properties, which could have a material adverse effect on us. We have acquired, and in the future may acquire, properties or portfolios of properties through tax deferred contribution transactions in exchange for OP Units.
Our use of OP Units as consideration to acquire properties could result in stockholder dilution or limit our ability to sell such properties, which could have a material adverse effect on us. We have acquired, and in the future may acquire, properties or portfolios of properties through tax deferred contribution transactions in exchange for OP Units.
We face significant competition for attractive investment opportunities from an 19 Table of Contents indeterminate number of investors, including publicly traded and privately held REITs, private equity investors, and institutional investment funds, some of which have greater financial resources than we do, a greater ability to borrow funds to make investments in properties than we do, and the ability to accept more risk than we can prudently manage, including risks with respect to the geographic proximity of investments and the payment of higher acquisition prices.
We face significant competition for attractive investment opportunities from an indeterminate number of investors, including publicly traded and privately held REITs, private equity investors, and institutional investment funds, some of which have greater financial resources than we do, a greater ability to borrow funds to make investments in properties than we do, and the ability to accept more risk than we can prudently manage, including risks with respect to the geographic proximity of investments and the payment of higher acquisition prices.
In addition, under our charter, our board of directors, without stockholder approval, has the power to authorize us to issue authorized but unissued shares of our common stock or preferred stock and to classify or reclassify any unissued shares of our common stock or preferred stock into one or more classes or series of stock and set the preference, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption for such newly classified or reclassified shares.
In addition, under our charter, our board of directors, without stockholder approval, has the power to authorize us to issue authorized but unissued shares of our common stock or preferred stock and to classify or reclassify any unissued shares of our common stock or preferred stock into one or more classes or series of stock and set the preference, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or 32 Table of Contents terms or conditions of redemption for such newly classified or reclassified shares.
As of December 31, 2022, Daniel Hoffler, our Executive Chairman, owned approximately 5.8% and, collectively, Messrs. Hoffler, Haddad, and Kirk owned approximately 10.1% of the combined outstanding shares of our common stock and OP Units of our Operating Partnership (which OP Units may be redeemable for shares of our common stock).
As of December 31, 2023, Daniel Hoffler, our Executive Chairman, owned approximately 5.8% and, collectively, Messrs. Hoffler, Haddad, and Kirk owned approximately 10.1% of the combined outstanding shares of our common stock and OP Units of our Operating Partnership (which OP Units may be redeemable for shares of our common stock).
We cannot assure stockholders that the market price of our common stock and Series A Preferred Stock will not fluctuate or decline significantly in the future, including as a result of factors unrelated to our operating performance or prospects in 2023 compared to 2022.
We cannot assure stockholders that the market price of our common stock and Series A Preferred Stock will not fluctuate or decline significantly in the future, including as a result of factors unrelated to our operating performance or prospects in 2024 compared to 2023.
This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we could deduct over the tax life of the acquired properties and requiring that we agree 24 Table of Contents to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties or the allocation of partnership debt to the contributors to maintain their tax bases.
This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we could deduct over the tax life of the acquired properties and requiring that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties or the allocation of partnership debt to the contributors to maintain their tax bases.
The occurrence of any of the following risks could materially and adversely impact our financial condition, results of operations, cash flow, the market price of shares of our common stock, and our ability to, among other things, satisfy our debt service obligations and to make distributions to our stockholders, which in turn could cause our stockholders to lose all or a part of their investment.
The occurrence of any of the following risks could materially and 15 Table of Contents adversely impact our financial condition, results of operations, cash flow, the market price of shares of our common stock, and our ability to, among other things, satisfy our debt service obligations and to make distributions to our stockholders, which in turn could cause our stockholders to lose all or a part of their investment.
Entering into new markets exposes us to a variety of risks, including difficulty evaluating local market conditions and local economies, developing new business relationships in the area, competing with other companies that already have an established presence in the area, hiring and retaining key personnel, evaluating quality tenants in the area, and a lack of familiarity with local governmental and permitting procedures.
Entering into new markets exposes us to a variety of risks, including difficulty evaluating local market conditions and local economies, developing new business relationships in the area, competing with other companies that 20 Table of Contents already have an established presence in the area, hiring and retaining key personnel, evaluating quality tenants in the area, and a lack of familiarity with local governmental and permitting procedures.
Consequently, we may choose not to engage in certain sales of our properties or may conduct such sales through our TRS, which would be subject to federal and state income taxation. Changes to the U.S. federal income tax laws, including the enactment of certain tax reform measures, could have an adverse impact on our business and financial results.
Consequently, we may choose not to engage in certain sales of our properties or may conduct such sales through our TRS, which would be subject to federal and state income taxation. 35 Table of Contents Changes to the U.S. federal income tax laws, including the enactment of certain tax reform measures, could have an adverse impact on our business and financial results.
Excluding unamortized fair value adjustments and debt issuance costs, the aggregate outstanding principal balance of our debt was $1.1 billion as of December 31, 2022. Payments of principal and interest on borrowings may leave us with insufficient cash resources to operate our properties or to pay the dividends currently contemplated or necessary to maintain our REIT qualification.
Excluding unamortized fair value adjustments and debt issuance costs, the aggregate outstanding principal balance of our debt was $1.4 billion as of December 31, 2023. Payments of principal and interest on borrowings may leave us with insufficient cash resources to operate our properties or to pay the dividends currently contemplated or necessary to maintain our REIT qualification.
DBRS Morningstar is expected to periodically evaluate our debt levels and other factors, which likely will include DBRS Morningstar’s assessment of our financial strength, liquidity, capital structure, asset quality, and sustainability of cash flow and earnings.
Morningstar DBRS is expected to periodically evaluate our debt levels and other factors, which likely will include Morningstar DBRS’s assessment of our financial strength, liquidity, capital structure, asset quality, and sustainability of cash flow and earnings.
This restriction, as well as other restrictions on transferability and ownership will not apply, however, if our board of directors determines that it is no longer in our best interests to continue to qualify as a REIT. Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
This restriction, as well as other restrictions on transferability and ownership will not apply, however, if our board of directors determines that it is no longer in our best interests to continue to qualify as a REIT. 36 Table of Contents Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
In particular, the market price of our common stock and Series A Preferred Stock could be subject to wide fluctuations in response to a number of factors, including, among others, the following: • actual or anticipated variations in our quarterly operating results or dividends; • changes in our FFO, Normalized FFO, or earnings estimates; • publication of research reports about us or the real estate industry; • increases in market interest rates that lead purchasers of our shares to demand a higher yield; • changes in market valuations of similar companies; • adverse market reaction to any additional debt we incur in the future; • additions or departures of key management personnel; • actions by institutional stockholders; • speculation in the press or investment community; • the realization of any of the other risk factors presented in this Annual Report on Form 10-K; • the extent of investor interest in our securities; • the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; • changes in the federal government; • our underlying asset value; • investor confidence in the stock and bond markets generally; • further changes in tax laws; • future equity issuances; • failure to meet earnings estimates; • failure to meet and maintain REIT qualifications; • changes in our credit ratings; • general market and economic conditions; • our issuance of debt securities or additional preferred equity securities; and 38 Table of Contents • our financial condition, results of operations, and prospects.
In particular, the market price of our common stock and Series A Preferred Stock could be subject to wide fluctuations in response to a number of factors, including, among others, the following: • actual or anticipated variations in our quarterly operating results or dividends; • changes in our FFO, Normalized FFO, or earnings estimates; • publication of research reports about us or the real estate industry; • increases in market interest rates that lead purchasers of our shares to demand a higher yield; • changes in market valuations of similar companies; • adverse market views with respect to asset classes in which we invest; • adverse market reaction to any additional debt we incur in the future; • additions or departures of key management personnel; • actions by institutional stockholders; • speculation in the press or investment community; • the realization of any of the other risk factors presented in this Annual Report on Form 10-K; • the extent of investor interest in our securities; • the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies; • changes in the federal government; • our underlying asset value; • investor confidence in the stock and bond markets generally; • further changes in tax laws; • future equity issuances; • failure to meet earnings estimates; • failure to meet and maintain REIT qualifications; • changes in our credit ratings; • general market and economic conditions; • our issuance of debt securities or additional preferred equity securities; and • our financial condition, results of operations, and prospects.
If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code.
If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the 22 Table of Contents property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code.
In order to maintain our qualification as a REIT, we are required under the Code to, among other things, distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding 18 Table of Contents any net capital gain.
In order to maintain our qualification as a REIT, we are required under the Code to, among other things, distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain.
Attribution rules in the Code determine if any individual or entity beneficially or constructively owns our capital stock under this requirement. Additionally, at least 100 persons must beneficially own our capital stock during at least 36 Table of Contents 335 days of a taxable year for each taxable year after 2013.
Attribution rules in the Code determine if any individual or entity beneficially or constructively owns our capital stock under this requirement. Additionally, at least 100 persons must beneficially own our capital stock during at least 335 days of a taxable year for each taxable year after 2013.
Our operating expenses, with the exception of ground lease rental expenses and multifamily properties, are typically recoverable through our lease arrangements, which allow us to pass through substantially all expenses associated with property 21 Table of Contents taxes, insurance, utilities, repairs and maintenance, and other operating expenses (including increases thereto) to our tenants.
Our operating expenses, with the exception of ground lease rental expenses and multifamily properties, are typically recoverable through our lease arrangements, which allow us to pass through substantially all expenses associated with property taxes, insurance, utilities, repairs and maintenance, and other operating expenses (including increases thereto) to our tenants.
In addition, the total amount of costs and expenses that may be incurred with respect to liabilities associated with these properties may exceed our expectations, and we may experience other unanticipated adverse effects, all of which may materially and adversely affect us.
In addition, the total amount of costs and expenses that may be incurred with respect to liabilities associated with 30 Table of Contents these properties may exceed our expectations, and we may experience other unanticipated adverse effects, all of which may materially and adversely affect us.
Our rental revenue and operating results depend significantly on the occupancy levels at our properties and the ability of our tenants to meet their rent obligations to us, which have been in certain cases, and could in the future be, adversely affected by, among other things, job losses, furloughs, store closures, lower incomes, uncertainty about the future as a result of an epidemic, pandemic or other health crisis and related governmental actions including eviction moratoriums, shelter-in-place orders, prohibitions on charging certain fees, and limitations on collection laws and rent increases, which have affected, and, if such restrictions are not lifted, or are reinstated, or new restrictions imposed, may continue to affect our ability to collect rent or enforce legal or contractual remedies for the failure to pay rent, which have negatively impacted, and may continue to negatively impact, our ability to remove tenants who are not paying rent and our ability to rent their space to new tenants.
Our rental revenue and operating results depend significantly on the occupancy levels at our properties and the ability of our tenants to meet their rent obligations to us, which have been in certain cases, and could in the future be, adversely affected by, among other things, job losses, furloughs, store closures, lower incomes, uncertainty about the future as a result of an epidemic, pandemic or other health crisis and related governmental actions including eviction moratoriums, shelter-in-place orders, prohibitions on charging certain fees, and limitations on collection laws and rent increases, which have in the past affected, and, may in the future affect, our ability to collect rent or enforce legal or contractual remedies for the failure to pay rent, which negatively impacted, and may in the future negatively impact, our ability to remove tenants who are not paying rent and our ability to rent their space to new tenants.
Our ability to make distributions may also be limited by our amended credit facility (as defined below). Under the terms of the amended credit facility, we may not pay cash dividends if a default has occurred and is continuing or would result therefrom.
Our ability to make distributions may also be limited by our amended credit facility. Under the terms of the amended credit facility, we may not pay cash dividends if a default has occurred and is continuing or would result therefrom.
We face risks related to an epidemic, pandemic or other health crisis, including the ongoing COVID-19 pandemic, which has impacted, and in the future could impact, the markets in which we operate and could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
We face risks related to an epidemic, pandemic or other health crisis which has impacted, and in the future could impact, the markets in which we operate and could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
Contract proposals 27 Table of Contents and negotiations are complex and frequently involve a lengthy bidding and selection process, which can be impacted by a number of factors, many of which are outside our control, including market conditions, financing arrangements, and required governmental approvals.
Contract proposals and negotiations are complex and frequently involve a lengthy bidding and selection process, which can be impacted by a number of factors, many of which are outside our control, including market conditions, financing arrangements, and required governmental approvals.
Our development and construction projects also have been and could in the future be adversely affected by factors related to an epidemic, pandemic or other health crisis, including the COVID-19 pandemic, although, to date, such impacts have not been material.
Our development and construction projects also have been and could in the future be adversely affected by factors related to an epidemic, pandemic or other health crisis, although, to date, such impacts have not been material.
At the same time, we, as the general partner of our Operating Partnership, have fiduciary duties and obligations to our Operating Partnership and its limited partners under Virginia law and the partnership agreement of our Operating Partnership in connection with the management of our Operating Partnership.
At the same time, we, as the general partner of our Operating Partnership, have fiduciary duties and obligations to our Operating Partnership and its limited partners under Virginia law and 31 Table of Contents the partnership agreement of our Operating Partnership in connection with the management of our Operating Partnership.
As a result, even if we are able to renew or re-lease apartment and student housing units as leases expire, our rental revenues will be impacted by declines in market rents more quickly than if all of our leases had longer terms, which could adversely affect our results of operations, cash flow, and cash available for distribution.
As a result, even if we are able to renew or re-lease apartment units as leases expire, our rental revenues will be impacted by declines in market rents more 19 Table of Contents quickly than if all of our leases had longer terms, which could adversely affect our results of operations, cash flow, and cash available for distribution.
An epidemic, pandemic or other health crisis, including the ongoing COVID-19 pandemic, and measures intended to prevent the spread of such an event could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations .
An epidemic, pandemic or other health crisis and measures intended to prevent the spread of such an event could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations .
The impact of an epidemic, pandemic or other health crisis, including the COVID-19 pandemic, and measures intended to prevent the spread of such an event could materially and adversely affect our business in a number of ways.
The impact of an epidemic, pandemic or other health crisis and measures intended to prevent the spread of such an event could materially and adversely affect our business in a number of ways.
In addition, future issuances of OP Units would reduce our ownership percentage in our Operating Partnership and affect the amount of distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to our stockholders.
In addition, future issuances of OP Units would reduce our ownership percentage in our Operating Partnership and affect the amount of 24 Table of Contents distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to our stockholders.
Finally, in connection with our loan investments, we may have options to purchase all or a portion of the underlying property upon maturity of the loan; however, if a developer’s costs for a project are higher than anticipated, exercising such options may not be attractive or economically feasible, or we may not have sufficient funds to exercise such options even if we desire to do so.
Finally, in connection with our real estate financing investments, we may have options to purchase all or a portion of the underlying property upon maturity of the investment; however, if a developer’s costs for a project are higher than anticipated, exercising such options may not be attractive or economically feasible, or we may not have sufficient funds to exercise such options even if we desire to do so.
Consequently, 31 Table of Contents these individuals may be able to significantly influence the outcome of matters submitted for stockholder action, including the approval of significant corporate transactions, including business combinations, consolidations, and mergers.
Consequently, these individuals may be able to significantly influence the outcome of matters submitted for stockholder action, including the approval of significant corporate transactions, including business combinations, consolidations, and mergers.
In addition, our ability to make land purchases will depend upon our having sufficient liquidity or access to external sources of capital to fund such purchases.
In addition, our ability to make land 16 Table of Contents purchases will depend upon our having sufficient liquidity or access to external sources of capital to fund such purchases.
To the extent we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been.
To the extent we borrow to fund distributions, our future interest costs 37 Table of Contents would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been.
Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms. Our tax protection agreements could limit our ability to sell or otherwise dispose of certain properties.
See “—The prohibited transactions tax may limit our ability to dispose of our properties.” Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms. Our tax protection agreements could limit our ability to sell or otherwise dispose of certain properties.
For example, all but one of the properties in our portfolio as of December 31, 2022 are located in Maryland, Virginia, North Carolina, South Carolina, Georgia, and Florida, which are areas particularly susceptible to hurricanes.
For example, all but one of the properties in our portfolio as of 17 Table of Contents December 31, 2023 are located in Maryland, Virginia, North Carolina, South Carolina, Georgia, and Florida, which are areas particularly susceptible to hurricanes.
Any foreclosure on a mortgaged property or group of properties could adversely affect the 22 Table of Contents overall value of our portfolio of properties.
Any foreclosure on a mortgaged property or group of properties could adversely affect the overall value of our portfolio of properties.
Furthermore, many of our properties are located in the Town Center of Virginia Beach and Harbor Point at Baltimore, and net operating income from each represented 23% and 19%, respectively, of our total net operating income for the year ended December 31, 2022.
Furthermore, many of our properties are located in the Town Center of Virginia Beach and Harbor Point at Baltimore, and net operating income from each represented 20% and 18%, respectively, of our total net operating income for the year ended December 31, 2023.
Adverse conditions in the general retail environment could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations. Approximately 41.3% of our net operating income for the year ended December 31, 2022 is from retail properties.
Adverse conditions in the general retail environment could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations. Approximately 39.6% of our net operating income for the year ended December 31, 2023 was from retail properties.
The limited partners in our Operating Partnership (other than us) owned approximately 23.3% of the outstanding OP Units of our Operating Partnership as of December 31, 2022. Our rights and the rights of our stockholders to take action against our directors and officers are limited.
The limited partners in our Operating Partnership (other than us) owned approximately 24.4% of the outstanding OP Units of our Operating Partnership as of December 31, 2023. Our rights and the rights of our stockholders to take action against our directors and officers are limited.
As of December 31, 2022, we owned 76.7% of the outstanding OP Units in our Operating Partnership. We regularly have issued OP Units to third parties as consideration for acquisitions, and we may continue to do so in the future.
As of December 31, 2023, we owned 75.6% of the outstanding OP Units in our Operating Partnership. We regularly have issued OP Units to third parties as consideration for acquisitions, and we may continue to do so in the future.
Most of our costs, such as operating and general and administrative expenses, interest expense, and real estate acquisition and construction costs, are subject to inflation . In 2022, the consumer price index rose by approximately 7% over the previous year, which was the largest annual inflation surge in 40 years.
Most of our costs, such as operating and general and administrative expenses, interest expense, and real estate acquisition and construction costs, are subject to inflation . 21 Table of Contents In 2023, the consumer price index rose by approximately 3% over the previous year, following 2022's increase in the index of 7% which was the largest annual inflation surge in 40 years.
In particular, the tax laws applicable to REITs effectively require that we hold our properties for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forego or defer sales of properties that otherwise would be in our best interests.
In particular, the tax laws applicable to REITs effectively require that we hold our properties for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forego or defer sales of properties that otherwise would be in our best interests or may subject us to penalties in the event any sales of our properties are not permitted under such laws.
We have in the past experienced cybersecurity incidents involving information technology systems, but we have not experienced any material cybersecurity incidents. We expect cybersecurity incidents to continue to occur in the future and we are constantly managing efforts to infiltrate and compromise our information technology systems and data.
We have in the past experienced cybersecurity incidents involving information technology systems, including through phishing attacks, but we have not experienced any material cybersecurity incidents. We expect cybersecurity incidents to continue to occur in the future and we are constantly attempting to mitigate efforts to infiltrate and compromise our information technology systems and data.
As the owner of the buildings on our properties, we could face liability for the presence of hazardous materials, such as asbestos or lead, or other adverse conditions, such as poor indoor air quality, in our buildings.
As a result, we could potentially incur material liability for these issues. As the owner of the buildings on our properties, we could face liability for the presence of hazardous materials, such as asbestos or lead, or other adverse conditions, such as poor indoor air quality, in our buildings.
If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences.
If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments.
If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt is paid in full.
If a borrower defaults on our real estate financing investment or debt senior to our investment, or in the event of a borrower bankruptcy, our real estate financing investment will be satisfied only after the senior debt is paid in full.
This ownership limit as well as other restrictions on ownership and transfer of our stock in our charter may: • discourage a tender offer or other transactions or a change in management or of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests; and • result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of certain of the benefits of owning the additional shares. 32 Table of Contents We could increase the number of authorized shares of stock, classify and reclassify unissued stock, and issue stock without stockholder approval.
This ownership limit as well as other restrictions on ownership and transfer of our stock in our charter may: • discourage a tender offer or other transactions or a change in management or of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests; and • result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of certain of the benefits of owning the additional shares.
We have originated, and in the future expect to originate or acquire, mezzanine or similar loans, which take the form of 20 Table of Contents subordinated loans secured by second mortgages on the underlying property or loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property.
We have originated, and in the future expect to originate or acquire, mezzanine loans, preferred equity investments, or similar investments (together "real estate financing investments"), which take the form of subordinated loans secured by second mortgages on the underlying property or loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property.
These events include many of the risks set forth above under "—Risks Related to Our Business," as well as the following: • oversupply or reduction in demand for office, retail, or multifamily space in our markets; • adverse changes in financial conditions of buyers, sellers, and tenants of properties; • vacancies or our inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights, or below-market renewal options, and the need to periodically repair, renovate, and re-lease space; • increased operating costs, including insurance premiums, utilities, real estate taxes, and state and local taxes; • increased property taxes due to property tax changes or reassessments; • a favorable interest rate environment that may result in a significant number of potential residents of our multifamily apartment communities deciding to purchase homes instead of renting; • rent control or stabilization laws or other laws regulating rental housing, which could prevent us from raising rents to offset increases in operating costs; 28 Table of Contents • civil unrest, acts of war, terrorist attacks, and natural disasters, including hurricanes, which may result in uninsured or underinsured losses; • decreases in the underlying value of our real estate; • changing submarket demographics; and • changing traffic patterns.
These events include many of the risks set forth above under "—Risks Related to Our Business," as well as the following: • oversupply or reduction in demand for retail, office, or multifamily space in our markets; • adverse changes in financial conditions of buyers, sellers, and tenants of properties; • vacancies or our inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights, rights to reduce leased-space during their lease, or below-market renewal options, and the need to periodically repair, renovate, and re-lease space; • increased operating costs, including insurance premiums, utilities, real estate taxes, and state and local taxes; • increased property taxes due to property tax changes or reassessments; • a favorable interest rate environment that may result in a significant number of potential residents of our multifamily apartment communities deciding to purchase homes instead of renting; • rent control or stabilization laws or other laws regulating rental housing, which could prevent us from raising rents to offset increases in operating costs; • civil unrest, acts of war, terrorist attacks, and natural disasters, including hurricanes, which may result in uninsured or underinsured losses; • decreases in the underlying value of our real estate; • changing submarket demographics; and • changing traffic patterns. 28 Table of Contents In addition, periods of economic downturn or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or an increased incidence of defaults under existing leases, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
If we fail to timely complete a construction project, miss a required performance standard, or otherwise fail to adequately perform on a construction project, we may incur losses or financial penalties, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, ability to service our debt obligations, and reputation.
If we are unable to maintain a consistent backlog of third-party construction contracts, our results of operations and cash flow could be materially and adversely affected. 27 Table of Contents If we fail to timely complete a construction project, miss a required performance standard, or otherwise fail to adequately perform on a construction project, we may incur losses or financial penalties, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, ability to service our debt obligations, and reputation.
Mezzanine loans and similar loan investments are subject to significant risks, and losses related to these investments could have a material adverse effect on our financial condition and results of operations.
Real estate financing investments are subject to significant risks, and losses related to these investments could have a material adverse effect on our financial condition and results of operations.
In addition, while certain locations have adopted programs that may reimburse past due rent owed by tenants who have left a community, such programs have only been adopted in a minority of our markets. It is uncertain how the rent relief programs will impact our business.
In addition, while certain locations have adopted programs that may reimburse past due rent owed by tenants who have left a community, such programs have only been adopted in a minority of our markets.
As of December 31, 2022, approximately 2.5% of the square footage of the stabilized properties in our office and retail portfolios was available.
As of December 31, 2023, approximately 3.4% of the square footage of the stabilized properties in our office and retail portfolios was available.
As of December 31, 2022, we had approximately $112.3 million in outstanding mezzanine loans or similar investments. These types of loans involve a higher degree of risk than long-term senior mortgage loans secured by income-producing real property because the loan may become unsecured as a result of foreclosure by the senior lender.
As of December 31, 2023, we had approximately $83.4 million in outstanding real estate financing investments. These types of investments involve a higher degree of risk than long-term senior mortgage loans secured by income-producing real property because the investment may become unsecured as a result of foreclosure by the senior lender.
In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. As a result, we may not recover some or all of our initial investment.
In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our real estate financing investment.
Additionally, 2.8% and 6.3% of the ABR in our office portfolio was scheduled to expire in 2023 and 2024, respectively, and 5.8% and 11.3% of the ABR in our retail portfolio was scheduled to expire in 2023 and 2024, respectively.
Additionally, 2.0% and 5.4% of the ABR in our office portfolio was scheduled to expire in 2024 and 2025, respectively, and 6.5% and 10.8% of the ABR in our retail portfolio was scheduled to expire in 2024 and 2025, respectively.
As of December 31, 2022, our properties in the Virginia, Maryland and North Carolina markets represented approximately 46%, 28%, and 15%, respectively, of the total net operating income of the properties in our portfolio.
As of December 31, 2023, our properties in the Virginia, Maryland. and North Carolina markets represented approximately 45%, 25%, and 14%, respectively, of the total net operating income of the properties in our portfolio.
An epidemic, pandemic or other health crisis, including the COVID-19 pandemic, or related impacts thereof also could adversely affect the businesses and financial conditions of our counterparties, including our joint venture partners and general contractors and their subcontractors, and their ability to satisfy their obligations to us and to complete transactions or projects with us as intended. 23 Table of Contents A cybersecurity incident or other technology disruptions could negatively impact our business, our relationships, and our reputation.
An epidemic, pandemic or other health crisis, or related impacts thereof also could adversely affect the businesses and financial conditions of our counterparties, including our joint venture partners and general contractors and their subcontractors, and their ability to satisfy their obligations to us and to complete transactions or projects with us as intended.
Significant losses related to mezzanine or similar loan investments could have a material adverse effect on our financial condition and results of operations.
Significant losses related to real estate financing investments could have a material adverse effect on our financial condition and results of operations.
As a result, we may be 35 Table of Contents required to liquidate otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders. The prohibited transactions tax may limit our ability to dispose of our properties. A REIT’s net income from prohibited transactions is subject to a 100% tax.
These actions could have the effect of reducing our income and amounts available for distribution to our stockholders. The prohibited transactions tax may limit our ability to dispose of our properties. A REIT’s net income from prohibited transactions is subject to a 100% tax.
In addition, in the event that we communicate certain initiatives and goals regarding environmental, social and governance matters, we could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could be criticized for the scope of such initiatives or goals.
In addition, we could fail, or be perceived to fail, in our achievement of initiatives or goals regarding environmental, social, and governance matters publicly communicated, including through our Sustainability Report, or we could be criticized for the scope of such initiatives or goals.
We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our investment activities or dispose of assets at inopportune times or on unfavorable terms, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations. 37 Table of Contents Risks Related to Our Capital Stock We may be unable to make distributions at expected levels, which could result in a decrease in the market price of our common stock and Series A Preferred Stock.
We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our investment activities or dispose of assets at inopportune times or on unfavorable terms, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
Other than as described above and as set forth in more detail in the articles supplementary designating the terms of our Series A Preferred Stock, holders of our Series A Preferred Stock will not have any voting rights. Holders of our Series A Preferred Stock may not be permitted to exercise conversion rights upon a change of control.
Other than as described above and as set forth in more detail in the articles supplementary designating the terms of our Series A Preferred Stock, holders of our Series A Preferred Stock will not have any 39 Table of Contents voting rights.
If the U.S. economy experiences an economic downturn, we may see increases in bankruptcies and defaults by our tenants, and we may experience higher vacancy rates and delays in re-leasing vacant space, which could negatively impact our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations. 15 Table of Contents Our failure to establish new development relationships with public partners and expand our development relationships with existing public partners could have a material adverse effect on our results of operations, cash flow, and growth prospects.
If the U.S. economy experiences an economic downturn, we may see increases in bankruptcies and defaults by our tenants, and we may experience higher vacancy rates and delays in re-leasing vacant space, which could negatively impact our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
See "Part I—Business—Regulation—Environmental Matters." In addition to the foregoing, while we obtained Phase I Environmental Site Assessments for each of the properties in our portfolio, the assessments are limited in scope and may have failed to identify all environmental conditions or concerns. For example, they do not generally include soil sampling, subsurface investigations or hazardous materials surveys.
See "Part I—Business—Regulation—Environmental 29 Table of Contents Matters." In addition to the foregoing, while we obtained Phase I Environmental Site Assessments for each of the properties in our portfolio, the assessments are limited in scope and may have failed to identify all environmental conditions or concerns.
Our business has been, and may in the future be, affected by market and economic challenges experienced by the U.S. economy or the real estate industry as a whole, including as a result of the COVID-19 pandemic and measures intended to mitigate its spread.
Our business has been, and may in the future be, affected by market and economic challenges experienced by the U.S. economy or the real estate industry as a whole.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOther than routine litigation arising out of the ordinary course of business, we are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us. Item 4. Mine Safety Disclosures. Not Applicable. 40 Table of Contents PART II
Biggest changeOther than routine litigation arising out of the ordinary course of business, we are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us. 42 Table of Contents Item 4. Mine Safety Disclosures. Not Applicable. 43 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe information in this paragraph and the following graph shall not be deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C, other than as provided in Item 201 of Regulation S-K, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), except to the extent we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act of 1933, as amended, or the Exchange Act. 41 Table of Contents Period Ending Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Armada Hoffler Properties, Inc. 100.00 95.78 131.32 84.16 119.61 95.89 MSCI US REIT 100.00 95.43 120.09 110.99 158.79 119.87 Russell 2000 100.00 88.99 111.70 134.00 153.85 122.41 Distribution Information Since our initial quarter as a publicly-traded REIT, we have made regular quarterly distributions to our stockholders, other than in the second and third quarters of 2020 in order to preserve liquidity due to the uncertainty caused by the COVID-19 pandemic.
Biggest changeThe information in this paragraph and the following graph shall not be deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C, other than as provided in Item 201 of Regulation S-K, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), except to the extent we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act. 44 Table of Contents Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Armada Hoffler Properties, Inc. 100.00 137.11 87.86 124.88 100.11 115.17 MSCI US REIT 100.00 125.84 116.31 166.39 125.61 142.87 Russell 2000 100.00 125.52 150.58 172.90 137.56 160.85 Distribution Information Since our initial quarter as a publicly-traded REIT, we have made regular quarterly distributions to our stockholders, other than in the second and third quarters of 2020 in order to preserve liquidity due to the uncertainty caused by the COVID-19 pandemic.
To the extent that our cash available for distribution is less than 90% of our REIT taxable income, we may consider various means to cover any such shortfall, including borrowing under our credit facility or other loans, selling certain of our assets, or using a portion of the net proceeds we receive from offerings of equity, equity-related, or debt securities, or declaring taxable share dividends.
To the extent that our cash available for distribution is less than 90% of our REIT taxable income, we may consider various means to cover any such shortfall, including borrowing under our amended credit facility or other loans, selling certain of our assets, or using a portion of the net proceeds we receive from offerings of equity, equity-related, or debt securities, or declaring taxable share dividends.
Market Information Our common stock trades on the New York Stock Exchange under the symbol "AHH" and our Series A Preferred Stock trades on the New York Stock Exchange under the symbol "AHHPrA." Stock Performance Graph The following graph sets forth the cumulative total stockholder return (assuming reinvestment of dividends) to our stockholders during the period December 31, 2017 through December 31, 2022, as well as the corresponding returns on an overall stock market index (Russell 2000) and a peer group index (MSCI US REIT Index).
Market Information Our common stock trades on the New York Stock Exchange under the symbol "AHH" and our Series A Preferred Stock trades on the New York Stock Exchange under the symbol "AHHPrA." Stock Performance Graph The following graph sets forth the cumulative total stockholder return (assuming reinvestment of dividends) to our stockholders during the period December 31, 2018 through December 31, 2023, as well as the corresponding returns on an overall stock market index (Russell 2000) and a peer group index (MSCI US REIT Index).
The stock performance graph assumes that $100 was invested on December 31, 2017. Historical total stockholder return is not necessarily indicative of future results.
The stock performance graph assumes that $100 was invested on December 31, 2018. Historical total stockholder return is not necessarily indicative of future results.
Declared cash dividends were $0.72 per share for the year ended December 31, 2022. We intend to continue to declare quarterly distributions. However, we cannot provide any assurance as to the amount or timing of future distributions.
Declared cash dividends were $0.775 per share for the year ended December 31, 2023. We intend to continue to declare quarterly distributions. However, we cannot provide any assurance as to the amount or timing of future distributions.
Return of capital distributions in excess of a stockholder’s basis generally will be treated as gain from the sale of such shares for federal income tax purposes. Stockholder Information As of February 17, 2023, there were approximately 99 holders of record of our common stock.
Return of capital distributions in excess of a stockholder’s basis generally will be treated as gain from the sale of such shares for federal income tax purposes. Stockholder Information As of February 23, 2024, there were approximately 118 holders of record of our common stock.
However, because many shares of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial holders of our common stock than record holders. As of February 17, 2023, there were 98 holders (other than our company) of our OP units.
However, because many shares of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial holders of our common stock than record holders. As of February 23, 2024, there were 102 holders (other than our company) of our OP Units.
Our OP units are redeemable for cash or, at our election, for shares of our common stock. Unregistered Sales of Equity Securities None. Issuer Purchases of Equity Securities None. Item 6. [Reserved]. Not applicable.
Our OP Units are redeemable for cash or, at our election, for shares of our common stock.
Added
Unregistered Sales of Equity Securities Subject to the satisfaction of certain conditions, holders of OP Units in the Operating Partnership may tender their OP Units for redemption by the Operating Partnership in exchange for cash equal to the market price of shares of our common stock at the time of redemption or, at our option and sole discretion, for shares of common stock on a one-for-one basis.
Added
During the three months ended December 31, 2023, we elected to satisfy certain redemption requests by issuing a total of 50,000 shares of common stock in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act. 45 Table of Contents Issuer Purchases of Equity Securities On June 15, 2023, we adopted a $50.0 million share repurchase program (the "Share Repurchase Program").
Added
Under the Share Repurchase Program, we may repurchase shares of common stock and Series A Preferred Stock from time to time in the open market, in block purchases, through privately negotiated transactions, the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, or other means permitted.
Added
The Share Repurchase Program does not obligate us to acquire any specific number of shares or acquire shares over any specific period of time. The Share Repurchase Program may be suspended or discontinued at any time and does not have an expiration date.
Added
The following table summarizes our common stock repurchase activity under the Share Repurchase Program for the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (a) October 1, 2023 through October 31, 2023 533,699 $ 10.35 533,699 $ 43,833 November 1, 2023 through November 30, 2023 606,191 10.61 606,191 37,402 December 1, 2023 through December 31, 2023 2,655 11.01 2,655 37,373 Total 1,142,545 $ 10.49 1,142,545 ________________________________________ (a) Reflects the dollar value of shares that may yet be repurchased under the Share Repurchase Program announced on June 15, 2023.
Added
Our board of directors authorized the repurchase of an aggregate of $50.0 million of shares of common stock and Series A Preferred Stock pursuant to the Share Repurchase Program.
Added
The following table summarizes our Series A Preferred Stock repurchase activity under the Share Repurchase Program for the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (a) October 1, 2023 through October 31, 2023 — $ — — $ 43,833 November 1, 2023 through November 30, 2023 — — — 37,402 December 1, 2023 through December 31, 2023 — — — 37,373 Total — $ — — ________________________________________ (a) Reflects the dollar value of shares that may yet be repurchased under the Share Repurchase Program announced on June 15, 2023.
Added
Our board of directors authorized the repurchase of an aggregate of $50.0 million of shares of common stock and Series A Preferred Stock pursuant to the Share Repurchase Program. Item 6. [Reserved]. Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeEnding backlog as of December 31, 2021 included $15.2 million in contracts with Beatty Development Group and $173.3 million in contracts with Dominion Realty Partners. 48 Table of Contents Consolidated Results of Operations The following table summarizes our results of operations for the years ended December 31, 2022, 2021, and 2020 (in thousands): Years Ended December 31, 2022 2021 2022 2021 2020 Change Change Revenues Rental revenues $ 219,294 $ 192,140 $ 166,488 $ 27,154 $ 25,652 General contracting and real estate services revenues 234,859 91,936 217,146 142,923 (125,210) Total revenues 454,153 284,076 383,634 170,077 (99,558) Expenses Rental expenses 50,742 46,494 38,960 4,248 7,534 Real estate taxes 22,057 21,852 18,136 205 3,716 General contracting and real estate services expenses 227,158 88,100 209,472 139,058 (121,372) Depreciation and amortization 72,974 68,853 59,972 4,121 8,881 Amortization of right-of-use assets - finance leases 1,110 1,022 586 88 436 General and administrative expenses 15,691 14,610 12,905 1,081 1,705 Acquisition, development and other pursuit costs 37 112 584 (75) (472) Impairment charges 416 21,378 666 (20,962) 20,712 Total expenses 390,185 262,421 341,281 127,764 (78,860) Gain on real estate dispositions 53,466 19,040 6,388 34,426 12,652 Operating income 117,434 40,695 48,741 76,739 (8,046) Interest income 16,978 18,457 19,841 (1,479) (1,384) Interest expense (39,680) (33,905) (31,035) (5,775) (2,870) Loss on extinguishment of debt (3,374) (3,810) — 436 (3,810) Change in fair value of derivatives and other 8,698 2,182 (1,130) 6,516 3,312 Unrealized credit loss release (provision) (626) 792 (256) (1,418) 1,048 Other income (expense), net 378 302 515 76 (213) Income before taxes 99,808 24,713 36,676 75,095 (11,963) Income tax benefit 145 742 283 (597) 459 Net income 99,953 25,455 36,959 74,498 (11,504) Net (income) loss attributable to noncontrolling interests in investment entities (5,948) 5 230 (5,953) (225) Preferred stock dividends (11,548) (11,548) (7,349) — (4,199) Net income attributable to common stockholders and OP Unitholders $ 82,457 $ 13,912 $ 29,840 $ 68,545 $ (15,928) Rental revenues .
Biggest changeReal estate financing gross profit for the year ended December 31, 2022 decreased 14.7% compared to the year ended December 31, 2021, primarily due to repayment of the mezzanine loan related to Solis Apartments at The Interlock in the second quarter of 2021, principal repayments on The Interlock mezzanine loan during the year ended December 31, 2022, and rising interest rates, partially offset by interest rate derivatives . 54 Table of Contents Consolidated Results of Operations The following table summarizes our results of operations for the years ended December 31, 2023, 2022, and 2021 (in thousands): Years Ended December 31, 2023 2022 2023 2022 2021 Change Change Revenues Rental revenues $ 238,924 $ 219,294 $ 192,140 $ 19,630 $ 27,154 General contracting and real estate services revenues 413,131 234,859 91,936 178,272 142,923 Interest income 15,103 16,978 18,457 (1,875) (1,479) Total revenues 667,158 471,131 302,533 196,027 168,598 Expenses Rental expenses 56,419 50,742 46,494 5,677 4,248 Real estate taxes 22,442 22,057 21,852 385 205 General contracting and real estate services expenses 399,713 227,158 88,100 172,555 139,058 Depreciation and amortization 96,078 72,974 68,853 23,104 4,121 Amortization of right-of-use assets - finance leases 1,349 1,110 1,022 239 88 General and administrative expenses 18,122 15,691 14,610 2,431 1,081 Acquisition, development, and other pursuit costs 84 37 112 47 (75) Impairment charges 102 416 21,378 (314) (20,962) Total expenses 594,309 390,185 262,421 204,124 127,764 Gain on real estate dispositions, net 738 53,466 19,040 (52,728) 34,426 Operating income 73,587 134,412 59,152 (60,825) 75,260 Interest expense (57,810) (39,680) (33,905) (18,130) (5,775) Loss on extinguishment of debt — (3,374) (3,810) — 436 Change in fair value of derivatives and other (6,242) 8,698 2,182 (14,940) 6,516 Unrealized credit loss (provision) release (574) (626) 792 52 (1,418) Other income (expense), net 31 378 302 (347) 76 Income before taxes 8,992 99,808 24,713 (90,816) 75,095 Income tax (provision) benefit (1,329) 145 742 (1,474) (597) Net income 7,663 99,953 25,455 (92,290) 74,498 Net (income) loss attributable to noncontrolling interests in investment entities (605) (5,948) 5 5,343 (5,953) Preferred stock dividends (11,548) (11,548) (11,548) — — Net (loss) income attributable to common stockholders and OP Unitholders $ (4,490) $ 82,457 $ 13,912 $ (86,947) $ 68,545 Rental revenues .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Business Description We are 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 and Southeastern United States.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Business Description We are a full-service real estate company with extensive experience developing, building, owning, and managing high-quality, institutional-grade retail, office, and multifamily properties in attractive markets throughout the Mid-Atlantic and Southeastern United States.
Our ability to borrow under the amended credit facility is subject to our ongoing compliance with a number of financial covenants, affirmative covenants and other restrictions, including the following: • Total leverage ratio of not more than 60% (or 65% for the two consecutive quarters following any acquisition with a purchase price of at least $100.0 million, but only up to two times during the term of the amended credit facility); • Ratio of adjusted EBITDA (as defined in the Credit Agreement) to fixed charges of not less than 1.50 to 1.0; • Tangible net worth of not less than the sum of (i) $825.2 million and (ii) an amount equal to 75% of the net equity proceeds received by us after June 30, 2022; • Ratio of secured indebtedness (excluding the amended credit facility if it becomes secured indebtedness) to total asset value of not more than 40%; • Ratio of secured recourse debt (excluding the amended credit facility if it becomes secured indebtedness) to total asset value of not more than 20%; • Total unsecured leverage ratio of not more than 60% (or 65% for the two consecutive quarters following any acquisition with a purchase price of at least $100.0 million, but only up to two times during the term of the credit facility); • Unencumbered interest coverage ratio (as defined in the Credit Agreement) of not less than 1.75 to 1.0; • Maintenance of a minimum of at least 15 unencumbered properties (as defined in the Credit Agreement) with an unencumbered asset value (as defined in the Credit Agreement) of not less than $500.0 million at any time; and • Minimum occupancy rate (as defined in the Credit Agreement) for all unencumbered properties of not less than 80% at any time.
Our ability to borrow under the amended credit facility is subject to our ongoing compliance with a number of financial covenants, affirmative covenants and other restrictions, including the following: • Total leverage ratio of not more than 60% (or 65% for the two consecutive quarters following any acquisition with a purchase price of at least $100.0 million, but only up to two times during the term of the amended credit facility); • Ratio of adjusted EBITDA (as defined in the Credit Agreement) to fixed charges of not less than 1.50 to 1.0; • Tangible net worth of not less than the sum of (i) $825.2 million and (ii) an amount equal to 75% of the net equity proceeds received by us after June 30, 2022; • Ratio of secured indebtedness (excluding the amended credit facility if it becomes secured indebtedness) to total asset value of not more than 40%; • Ratio of secured recourse debt (excluding the amended credit facility if it becomes secured indebtedness) to total asset value of not more than 20%; • Total unsecured leverage ratio of not more than 60% (or 65% for the two consecutive quarters following any acquisition with a purchase price of at least $100.0 million, but only up to two times during the term of the amended credit facility); • Unencumbered interest coverage ratio (as defined in the Credit Agreement) of not less than 1.75 to 1.0; • Maintenance of a minimum of at least 15 unencumbered properties (as defined in the Credit Agreement) with an unencumbered asset value (as defined in the Credit Agreement) of not less than $500.0 million at any time; and • Minimum occupancy rate (as defined in the Credit Agreement) for all unencumbered properties of not less than 80% at any time.
In addition, other equity REITs may not calculate FFO in accordance with the Nareit definition as we do, and, accordingly, our calculation of FFO may not be comparable to such other REITs’ calculation of FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of our performance.
In addition, other equity REITs may not calculate FFO in accordance with the Nareit definition as we do, and, accordingly, our calculation of FFO may not be comparable to such other REITs’ calculations of FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of our performance.
(2) The adjustment for gain on real estate dispositions for the year ended December 31, 2022 excludes $5.4 million of the gain on the sale of The Residences at Annapolis Junction that was allocated to our joint venture partner.
The adjustment for gain on real estate dispositions for the year ended December 31, 2022 excludes $5.4 million of the gain on the sale of The Residences at Annapolis Junction that was allocated to our joint venture partner.
If the carrying amount of a real estate asset exceeds its associated undiscounted expected future cash flows, we recognize an impairment loss to reduce the carrying amount of the real estate asset to its fair value based on marketplace participant assumptions. 44 Table of Contents Interest Income Interest income on notes receivable is accrued based on the contractual terms of the loans and when, in the opinion of management, it is deemed collectible.
If the carrying amount of a real estate asset exceeds its associated undiscounted expected future cash flows, we recognize an impairment loss to reduce the carrying amount of the real estate asset to its fair value based on marketplace participant assumptions. 48 Table of Contents Interest Income Interest income on notes receivable is accrued based on the contractual terms of the loans and when, in the opinion of management, it is deemed collectible.
Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements that have been prepared in accordance with GAAP. The Company's accounting policies are more fully described in Note 2 of our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements that have been prepared in accordance with GAAP. Our accounting policies are more fully described in Note 2 of our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
We also believe that the computation of FFO in accordance with Nareit’s definition includes certain items that are not indicative of the results provided by our operating property portfolio and affect the comparability of our year-over-year performance.
We also believe that the computation of FFO in accordance with Nareit’s definition includes certain items that are not indicative of the results provided by our operating property portfolio and affect the comparability of our period-over-period performance.
The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among other things, declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the amended credit facility to be immediately due and payable. We are currently in compliance with all covenants under the Credit Agreement.
The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among other things, declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the amended credit facility to be immediately due and payable. 59 Table of Contents We are currently in compliance with all covenants under the Credit Agreement.
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 period-over-period, captures trends in occupancy rates, rental rates, and operating costs.
Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions 66 Table of Contents which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared period-over-period, captures trends in occupancy rates, rental rates, and operating costs.
Accordingly, management believes that Normalized FFO is a more useful performance measure that excludes certain items, including but not limited to, debt extinguishment losses and prepayment penalties, impairment of intangible assets and liabilities, property acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives not designated as cash flow hedges, certain costs for interest rate caps 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.
Accordingly, management believes that Normalized FFO is a more useful performance measure that excludes certain items, including but not limited to, debt extinguishment losses and prepayment penalties, impairment and accelerated amortization of intangible assets and liabilities, property 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.
We may, at any time, voluntarily prepay the M&T term loan facility in whole or in part without premium or penalty, provided certain conditions are met. The term loan agreement includes customary events of default, in certain cases subject to customary cure periods.
We may, at any time, voluntarily prepay the M&T term loan facility in whole or in part without premium or penalty, 60 Table of Contents provided certain conditions are met. The M&T term loan agreement includes customary events of default, in certain cases subject to customary cure periods.
(3) Contractual obligations above do not include funding obligations to non-wholly owned development projects as well as unfunded mezzanine loan and preferred equity investment commitments due to the uncertainty of the timing and amounts of certain of these obligations. Refer to "Item 1. Business" for information about our development projects, mezzanine loans and preferred equity investments.
(3) Contractual obligations above do not include funding obligations to non-wholly owned development projects as well as unfunded real estate financing investment commitments due to the uncertainty of the timing and amounts of certain of these obligations. Refer to "Item 1. Business" for information about our development projects, mezzanine loans and preferred equity investments.
Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, are all significant judgments that may result in revisions to costs and income 43 Table of Contents and are recognized in the period in which they are determined.
Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, are all significant judgments that may result in revisions to costs and income and are recognized in the period in which they are determined.
Additionally, any property that is substantially taken out of service for the purpose of redevelopment is no longer considered stabilized until the redevelopment activities are complete, the asset is placed back into service, and the stabilization criteria above are again met.
Additionally, any property that is fully or partially taken out of service for the purpose of redevelopment is no longer considered stabilized until the redevelopment activities are complete, the asset is placed back into service, and the stabilization criteria above are again met.
This section of this Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
We are the sole general partner of our Operating Partnership and, as of December 31, 2022, we owned, through a combination of direct and indirect interests, 76.7% of the outstanding OP units in our Operating Partnership. We elected to be taxed as a REIT for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2013.
We are the sole general partner of our Operating Partnership and, as of December 31, 2023, we owned, through a combination of direct and indirect interests, 75.6% of the outstanding OP Units in our Operating Partnership. We elected to be taxed as a REIT for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2013.
We expect to meet our long-term liquidity requirements with net cash from operations, long-term secured and unsecured indebtedness, and the issuance of equity and debt securities. We also may fund property development and acquisitions and capital improvements using our credit facility pending long-term financing.
We expect to meet our long-term liquidity requirements with net cash from operations, long-term secured and unsecured indebtedness, the issuance of equity and debt securities, and the opportunistic disposition of non-core properties. We also may fund property development and acquisitions and capital improvements using our amended credit facility pending long-term financing.
As of December 31, 2022, our stabilized operating property portfolio was comprised of 38 retail 42 Table of Contents properties, 9 office properties, and 10 multifamily properties. In addition to our operating property portfolio, we had one mixed-use property and one multifamily property in various stages of predevelopment, development, redevelopment, or stabilization as of December 31, 2022.
As of December 31, 2023, our stabilized operating property portfolio was comprised of 38 retail properties, 10 office properties, and 11 multifamily properties. In addition to our operating property portfolio, we had one mixed-use property and one retail property in various stages of predevelopment, development, redevelopment, or stabilization 46 Table of Contents as of December 31, 2023.
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.
FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because we believe that FFO is beneficial to investors as a starting point in measuring our operational performance.
The revolving credit facility bears interest at SOFR plus a margin ranging from 1.30% to 1.85%, and the term loan facility bears interest at SOFR plus a margin ranging from 1.25% to 1.80%, in each case depending on our total leverage.
The revolving credit facility bears interest at SOFR plus a margin ranging from 1.30% to 1.85%, and the term loan facility bears interest at SOFR plus a margin ranging from 1.25% to 1.80%, in each case depending on our total leverage and in each case subject to a credit spread adjustment of 0.10%.
For the year ended December 31, 2022, we have elected for the loan to bear interest at term SOFR plus margin. If we attain investment grade credit ratings from both S&P Global Ratings and 53 Table of Contents Moody's Investor Service, Inc., we may elect to have borrowings become subject to interest rates based on such credit ratings.
We have elected for the loan to bear interest at term SOFR plus margin. If we attain investment grade credit ratings from both S&P Global Ratings and Moody's Investor Service, Inc., we may elect to have borrowings become subject to interest rates based on such credit ratings.
Gain on real estate dispositions for the year ended December 31, 2022 totaled $53.5 million and related primarily to the disposition of The Residences at Annapolis Junction, the AutoZone and Valvoline outparcels at Sandbridge Commons, and the Home Depot and Costco parcels at North Pointe.
During the year ended December 31, 2022, we recognized gains on real estate dispositions of $53.5 million, primarily related to the disposition of The Residences at Annapolis Junction, the AutoZone and Valvoline outparcels at Sandbridge Commons, and the Home Depot and Costco parcels at North Pointe. Interest expense.
As of December 31, 2022, we had unrestricted cash and cash equivalents of $48.1 million available for both current liquidity needs as well as development activities. As of December 31, 2022, we also had restricted cash in escrow of $3.7 million, some of which is available for capital expenditures at our operating properties.
As of December 31, 2023, we had unrestricted cash and cash equivalents of $27.9 million available for both current liquidity needs as well as development and redevelopment activities. As of December 31, 2023, we also had restricted cash in escrow of $2.2 million, some of which is available for capital expenditures at our operating properties.
The intended goal of these corridors is to provide a level of protection from the effect of rising interest rates and reduce the all-in cost of the derivative instrument. (b) The notional amount represents the maximum notional amount that will eventually be in effect.
The intended goal of these corridors is to provide a level of protection from the effect of rising interest rates and reduce the all-in cost of the derivative instrument. (b) Represents the notional amount as of December 31, 2023.
(4) Contractual Obligations above exclude increased ground lease payments at 1405 Point which is classified as a note payable in the consolidated balance sheets. Off-Balance Sheet Arrangements In connection with our mezzanine lending activities, we have guaranteed payment of portions of certain senior loans of third parties associated with the development projects.
(4) Contractual Obligations above exclude increased ground lease payments at 1405 Point which is classified as a note payable in the consolidated balance sheets. Off-Balance Sheet Arrangements In connection with certain of our real estate financing activities and equity method investments, we have made guarantees to pay portions of certain senior loans of third parties associated with the development projects.
Rental revenues for the year ended December 31, 2022 increased $7.8 million, or 9.9%, compared to the year ended December 31, 2021. NOI for the year ended December 31, 2022 increased $6.1 million, or 10.5%, compared to the year ended December 31, 2021.
Rental revenues for the year ended December 31, 2023 increased $8.5 million, or 11.5%, compared to the year ended December 31, 2022. NOI for the year ended December 31, 2023 increased $3.6 million, or 7.5%, compared to the year ended December 31, 2022.
Unrealized credit loss provision for the year ended December 31, 2022 relates to the reserves recorded for the City Park 2 and Solis Gainesville II investments, offset by a release in the allowance for the Nexton Multifamily preferred equity investment. Other income (expense), net for the years ended December 31, 2022 and 2021 was materially consistent.
Unrealized credit loss provision for the year ended December 31, 2022 relates to the provision recorded for the Solis City Park II and Solis Gainesville II investments, partially offset by a release related to the redemption of the Nexton Multifamily preferred equity investment. Other income (expense), net .
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. 58 Table of Contents However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited.
However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited.
Segment Results of Operations As of December 31, 2022, we operated our business in four segments: (i) office real estate, (ii) retail real estate, (iii) multifamily residential real estate, and (iv) general contracting and real estate services that are conducted through our TRSs.
Segment Results of Operations As of December 31, 2023, we operated our business in five segments: (i) retail real estate, (ii) office real estate, (iii) multifamily residential real estate, (iv) general contracting and real estate services, and (v) real estate financing.
Retail Segment Data Retail rental revenues, property expenses, and NOI for the years ended December 31, 2022, 2021 and 2020 were as follows ($ in thousands): Years Ended December 31, 2022 2021 2020 Rental revenues $ 86,344 $ 78,572 $ 73,032 Property expenses 22,642 20,928 18,813 NOI $ 63,702 $ 57,644 $ 54,219 Square feet (1) 3,916,001 4,067,355 3,651,213 Occupancy (1) 97.9 % 96.0 % 94.7 % ________________________________________ 46 Table of Contents (1) Stabilized properties as of the end of the periods presented.
Retail Segment Data Retail rental revenues, property expenses, and NOI for the years ended December 31, 2023, 2022, and 2021 were as follows ($ in thousands): Years Ended December 31, 2023 2022 2021 Rental revenues $ 97,762 $ 86,344 $ 78,572 Property expenses 24,976 22,642 20,928 NOI $ 72,786 $ 63,702 $ 57,644 Square feet (1) 3,929,937 3,916,001 4,067,355 Occupancy (1) 97.4 % 97.9 % 96.0 % ________________________________________ (1) Stabilized properties as of the end of the periods presented.
The changes in construction backlog for each of the years ended December 31, 2022, 2021, and 2020 were as follows (in thousands): Years Ended December 31, 2022 2021 2020 Beginning backlog $ 215,519 $ 71,258 $ 242,622 New contracts/change orders 685,753 236,077 45,882 Work performed (235,707) (91,816) (217,246) Ending backlog $ 665,565 $ 215,519 $ 71,258 During the year ended December 31, 2022, we executed new contracts with Beatty Development Group related to the Harbor Point development in Baltimore totaling $423.8 million in addition to $246.9 million of new contracts with Dominion Realty Partners.
The changes in construction backlog for each of the years ended December 31, 2023, 2022, and 2021 were as follows (in thousands): Years Ended December 31, 2023 2022 2021 Beginning backlog $ 665,565 $ 215,519 $ 71,258 New contracts/change orders 221,473 685,753 236,077 Work performed (414,868) (235,707) (91,816) Ending backlog $ 472,170 $ 665,565 $ 215,519 During the year ended December 31, 2023, we executed new contracts or change orders with Beatty Development Group related to the Harbor Point development in Baltimore totaling $89.6 million in addition to $64.8 million with Terwilliger Pappas in connection with the development of Solis Kennesaw, and $49.6 million with Dominion Realty Partners.
The following table sets forth a reconciliation of FFO and Normalized FFO for each of the years ended December 31, 2022, 2021 and 2020 to net income, the most directly comparable GAAP measure: Years Ended December 31, 2022 2021 2020 (in thousands, except per share and unit amounts) Net income attributable to common stockholders and OP Unitholders $ 82,457 $ 13,912 $ 29,840 Depreciation and amortization (1) 71,971 68,853 59,545 Gain on operating real estate dispositions (2) (47,984) (18,793) (6,388) Impairment of real estate assets 201 21,378 — FFO attributable to common stockholders and OP Unitholders 106,645 85,350 82,997 Acquisition, development and other pursuit costs 37 112 584 Impairment of intangible assets and liabilities 215 — 666 Loss on extinguishment of debt 3,374 3,810 — Unrealized credit loss (release) provision 626 (792) 256 Amortization of right-of-use assets - finance leases 1,110 1,022 586 Change in fair value of derivatives not designated as cash flow hedges and other (8,698) (2,182) 1,130 Amortization of interest rate cap premiums on designated cash flow hedges 3,849 235 — Normalized FFO available to common stockholders and OP Unitholders $ 107,158 $ 87,555 $ 86,219 Net income attributable to common stockholders and OP Unitholders per diluted share and unit $ 0.93 $ 0.17 $ 0.38 FFO attributable to common stockholders and OP Unitholders per diluted share and unit $ 1.21 $ 1.05 $ 1.06 Normalized FFO attributable to common stockholders and OP Unitholders per diluted share and unit $ 1.22 $ 1.08 $ 1.10 Weighted-average common shares and units - diluted 88,192 81,445 78,309 ________________________________________ (1) The adjustment for depreciation and amortization for the year ended December 31, 2020 excludes $0.4 million of depreciation attributable to the Company's joint venture partners.
Other equity REITs may not calculate Normalized FFO in the same manner as we do, and, accordingly, our Normalized FFO may not be comparable to such other REITs' Normalized FFO. 67 Table of Contents The following table sets forth a reconciliation of FFO and Normalized FFO for each of the years ended December 31, 2023, 2022 and 2021 to net income, the most directly comparable GAAP measure: Years Ended December 31, 2023 2022 2021 (in thousands, except per share and unit amounts) Net (loss) income attributable to common stockholders and OP Unitholders $ (4,490) $ 82,457 $ 13,912 Depreciation and amortization (1) 95,208 71,971 68,853 Gain on operating real estate dispositions, net (2) — (47,984) (18,793) Impairment of real estate assets — 201 21,378 FFO attributable to common stockholders and OP Unitholders 90,718 106,645 85,350 Acquisition, development, and other pursuit costs 84 37 112 Accelerated amortization of intangible assets and liabilities (653) 215 — Loss on extinguishment of debt — 3,374 3,810 Unrealized credit loss (release) provision 574 626 (792) Amortization of right-of-use assets - finance leases 1,349 1,110 1,022 Decrease (Increase) in fair value of derivatives not designated as cash flow hedges 14,185 (8,698) (2,182) Amortization of interest rate derivative premiums on designated cash flow hedges 4,210 3,849 235 Normalized FFO available to common stockholders and OP Unitholders $ 110,467 $ 107,158 $ 87,555 Net (loss) income attributable to common stockholders and OP Unitholders per diluted share and unit $ (0.05) $ 0.93 $ 0.17 FFO attributable to common stockholders and OP Unitholders per diluted share and unit $ 1.02 $ 1.21 $ 1.05 Normalized FFO attributable to common stockholders and OP Unitholders per diluted share and unit $ 1.24 $ 1.22 $ 1.08 Weighted-average common shares and units - diluted 88,864 88,192 81,445 ________________________________________ (1) The adjustment for depreciation and amortization for the years ended December 31, 2023 and 2022 excludes $0.9 million and $1.0 million, respectively, of depreciation attributable to our joint venture partners.
We have recorded a $0.3 million credit loss reserve in conjunction with the total unfunded commitments. Such commitments are subject to our borrowers’ satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets.
Such commitments are subject to our borrowers’ satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets.
Real estate taxes by segment for the years ended December 31, 2022, 2021, and 2020 were as follows (in thousands): Years Ended December 31, 2022 2021 2022 2021 2020 Change Change Office $ 7,625 $ 6,112 $ 5,111 $ 1,513 $ 1,001 Retail 8,873 8,416 7,784 457 632 Multifamily 5,559 7,324 5,241 (1,765) 2,083 $ 22,057 $ 21,852 $ 18,136 $ 205 $ 3,716 Real estate taxes increased $0.2 million during the year ended December 31, 2022 compared to the year ended December 31, 2021.
Real estate taxes by segment for the years ended December 31, 2023, 2022, and 2021 were as follows (in thousands): Years Ended December 31, 2023 2022 2023 2022 2021 Change Change Retail $ 8,806 $ 8,873 $ 8,416 $ (67) $ 457 Office 8,742 7,625 6,112 1,117 1,513 Multifamily 4,894 5,559 7,324 (665) (1,765) $ 22,442 $ 22,057 $ 21,852 $ 385 $ 205 Real estate taxes increased $0.4 million, or 1.7%, during the year ended December 31, 2023 compared to the year ended December 31, 2022.
The notional amount is scheduled to increase over the term of the corridor in accordance with projected borrowings on the associated loan.
The notional amount is scheduled to increase over the term of the corridor in accordance with projected borrowings on the associated loan. The maximum notional amount that will eventually be in effect is $73.6 million.
Inflation 59 Table of Contents Substantially all of our office and retail leases provide for the recovery of increases in real estate taxes and operating expenses. In addition, substantially all of the leases provide for annual rent increases. We believe that inflationary increases may be offset in part by the contractual rent increases and expense escalations previously described.
In addition, substantially all of the leases provide for annual rent increases. We believe that inflationary increases may be offset in part by the contractual rent increases and expense escalations previously described.
Rental expenses by segment for each of the three years ended December 31, 2022 were as follows (in thousands): Years Ended December 31, 2022 2021 2022 2021 2020 Change Change Office $ 18,710 $ 12,412 $ 10,799 $ 6,298 $ 1,613 Retail 13,769 12,512 11,029 1,257 1,483 Multifamily 18,263 21,570 17,132 (3,307) 4,438 $ 50,742 $ 46,494 $ 38,960 $ 4,248 $ 7,534 Rental expenses increased $4.2 million during the year ended December 31, 2022 compared to the year ended December 31, 2021.
Rental expenses by segment for each of the years ended December 31, 2023, 2022, and 2021 were as follows (in thousands): Years Ended December 31, 2023 2022 2023 2022 2021 Change Change Retail $ 16,170 $ 13,769 $ 12,512 $ 2,401 $ 1,257 Office 22,477 18,710 12,412 3,767 6,298 Multifamily 17,772 18,263 21,570 (491) (3,307) $ 56,419 $ 50,742 $ 46,494 $ 5,677 $ 4,248 Rental expenses increased $5.7 million, or 11.2%, during the year ended December 31, 2023 compared to the year ended December 31, 2022.
Office Same Store Results Office same store rental revenues, property expenses, and NOI for the comparative years ended December 31, 2022 and 2021 and December 31, 2021, and 2020 were as follows (in thousands): Years Ended Years Ended December 31, December 31, 2022 (1) 2021 (1) Change 2021 (2) 2020 (2) Change Rental revenues $ 41,705 $ 40,965 $ 740 $ 40,965 $ 40,420 $ 545 Property expenses 15,326 14,513 813 14,513 14,060 453 Same Store NOI $ 26,379 $ 26,452 $ (73) $ 26,452 $ 26,360 $ 92 Non-Same Store NOI 21,322 2,387 18,935 2,387 1,224 1,163 Segment NOI $ 47,701 $ 28,839 $ 18,862 $ 28,839 $ 27,584 $ 1,255 ________________________________________ (1) Same store excludes Wills Wharf and the Constellation Office.
Office Same Store Results Office same store rental revenues, property expenses, and NOI for the comparative years ended December 31, 2023 and 2022 and December 31, 2022, and 2021 were as follows (in thousands): Years Ended Years Ended December 31, December 31, 2023 (1) 2022 (1) Change 2022 (2) 2021 (2) Change Rental revenues $ 39,905 $ 41,705 $ (1,800) $ 41,705 $ 40,965 $ 740 Property expenses 16,246 15,326 920 15,326 14,513 813 Same Store NOI $ 23,659 $ 26,379 $ (2,720) $ 26,379 $ 26,452 $ (73) Non-Same Store NOI 27,639 21,322 6,317 21,322 2,387 18,935 Segment NOI $ 51,298 $ 47,701 $ 3,597 $ 47,701 $ 28,839 $ 18,862 ________________________________________ (1) Same store excludes The Interlock Office, Wills Wharf, and the Constellation Office.
We expect to meet our short-term liquidity requirements through net cash provided by operations, reserves established from existing cash, borrowings under construction loans to fund new real estate development and construction, borrowings available under our credit facility, and net proceeds from the sale of common stock through our at-the-market continuous equity offering program (the "ATM Program"), which is discussed below. 51 Table of Contents Our long-term liquidity needs consist primarily of funds necessary for the repayment of debt at or prior to maturity, general contracting expenses, property development and acquisitions, tenant improvements, and capital improvements.
We expect to meet our short-term liquidity requirements through net cash provided by operations, reserves established from existing cash, borrowings under construction loans to fund new real estate development and construction, borrowings available under our amended credit facility, and net proceeds from the opportunistic sale of common stock through our at-the-market continuous equity offering program (the "ATM Program"), which is discussed below.
Additionally, the adjustment for gain on real estate dispositions for the year ended December 31, 2021 excludes the gain on sale of easement rights on a non-operating parcel and the loss on sale of a non-operating parcel.
Additionally, the adjustment for gain on real estate dispositions for the year ended December 31, 2021 excludes the gain on sale of easement rights on a non-operating parcel and the loss on sale of a non-operating parcel. Inflation Substantially all of our office and retail leases provide for the recovery of increases in real estate taxes and operating expenses.
The M&T term loan facility bears interest at a rate elected by us based on term SOFR, Daily Simple SOFR, or the Base Rate (as defined below), and in each case plus a margin. The margin under each interest rate election depends on our total leverage.
The M&T term loan facility bears interest at a rate elected by us based on term SOFR, Daily Simple SOFR, or the Base Rate (as defined below), and in each case plus a margin. A term SOFR or Daily Simple SOFR loan is also subject to a credit spread adjustment of 0.10%.
As of December 31, 2022, we had $233.5 million available under our credit facility to meet our short-term liquidity requirements and $81.1 million available under construction loans to fund development activities.
As of December 31, 2023, we had $76.3 million available for borrowings under our amended credit facility to meet our short-term liquidity requirements and $43.7 million available for borrowings under construction loans to fund development activities.
Liquidity and Capital Resources Overview We believe our primary short-term liquidity requirements consist of general contractor expenses, operating expenses, and other expenditures associated with our properties, including tenant improvements, leasing commissions and leasing incentives, dividend payments to our stockholders required to maintain our REIT qualification, debt service, capital expenditures, new real estate development projects, mezzanine loan funding requirements, and strategic acquisitions.
The income tax (provision) benefit recognized during the years ended December 31, 2023 and 2022 is attributable to the taxable profits and losses of our development and construction businesses that we operate through our TRS. 57 Table of Contents Liquidity and Capital Resources Overview We believe our primary short-term liquidity requirements consist of general contractor expenses, operating expenses, and other expenditures associated with our properties, including tenant improvements, leasing commissions and leasing incentives, dividend payments to our stockholders required to maintain our REIT qualification, debt service, capital expenditures, new real estate development projects, mezzanine loan funding requirements, and strategic acquisitions.
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. 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 and construction businesses.
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, construction, and real estate financing businesses.
Interest Rate Derivatives As of December 31, 2022, we were party to the following LIBOR, SOFR, and BSBY interest rate cap agreements ($ in thousands): Effective Date Maturity Date Strike Rate Notional Amount 2/2/2021 2/1/2023 0.50% (LIBOR) $ 100,000 3/4/2021 4/1/2023 2.50% (LIBOR) 14,479 11/1/2020 11/1/2023 1.84% (SOFR) 84,375 7/1/2022 1/1/2024 1.00%-3.00% (SOFR) (a) 50,000 7/5/2022 1/1/2024 1.00%-3.00% (SOFR) (a) 35,100 1/11/2022 2/1/2024 4.00% (BSBY) 175,000 4/7/2022 2/1/2024 1.00%-3.00% (BSBY) (a) 175,000 7/6/2022 3/1/2024 1.00%-3.00% (SOFR) (a) 200,000 9/1/2022 9/1/2024 1.00%-3.00% (SOFR) (a) 73,562 (b) Total $ 907,516 ________________________________________ (a) We purchased interest rate caps at 1.00% and sold interest rate caps at 3.00%, resulting in interest rate cap corridors of 1.00% and 3.00%.
Interest Rate Derivatives As of December 31, 2023, we were party to the following SOFR interest rate cap agreements ($ in thousands): Effective Date Maturity Date Strike Rate Notional Amount 7/5/2022 1/1/2024 1.00%-3.00% (a) $ 35,100 9/1/2022 9/1/2024 1.00%-3.00% (a) 63,169 (b) Total $ 98,269 ________________________________________ (a) We purchased interest rate caps at 1.00% and sold interest rate caps at 3.00%, resulting in interest rate cap corridors of 1.00% and 3.00%.
Amounts also include unused credit facility fees assuming the balance outstanding as of December 31, 2022 remains constant through maturity of our revolving credit facility.
As of December 31, 2023, SOFR was 535 basis points. (2) Assumes the $267.0 million revolving credit facility balance outstanding as of December 31, 2023 remains constant through maturity of the facility. Amounts also include unused credit facility fees assuming the balance outstanding as of December 31, 2023 remains constant through maturity of our revolving credit facility.
Multifamily Same Store Results Multifamily same store rental revenues, property expenses, and NOI for the comparative years ended December 31, 2022 and 2021 and December 31, 2021 and 2020 were as follows (in thousands): 47 Table of Contents Years Ended Years Ended December 31, December 31, 2022 (1) 2021 (1) Change 2021 (2) 2020 (2) Change Rental revenues $ 44,098 $ 41,008 $ 3,090 $ 28,727 $ 26,834 $ 1,893 Property expenses 16,858 16,226 632 11,188 11,021 167 Same Store NOI $ 27,240 $ 24,782 $ 2,458 $ 17,539 $ 15,813 $ 1,726 Non-Same Store NOI 7,852 12,529 (4,677) 19,772 11,776 7,996 Segment NOI $ 35,092 $ 37,311 $ (2,219) $ 37,311 $ 27,589 $ 9,722 ________________________________________ (1) Same store excludes 1305 Dock Street, Chronicle Mill, and Gainesville Apartments as well as properties that were disposed in 2022.
Multifamily Same Store Results Multifamily same store rental revenues, property expenses, and NOI for the comparative years ended December 31, 2023 and 2022 and December 31, 2022 and 2021 were as follows (in thousands): Years Ended Years Ended December 31, December 31, 2023 (1) 2022 (1) Change 2022 (1) 2021 (1) Change Rental revenues $ 46,133 $ 44,098 $ 2,035 $ 44,098 $ 41,008 $ 3,090 Property expenses 17,884 16,858 1,026 16,858 16,226 632 Same Store NOI $ 28,249 $ 27,240 $ 1,009 $ 27,240 $ 24,782 $ 2,458 Non-Same Store NOI 7,730 7,852 (122) 7,852 12,529 (4,677) Segment NOI $ 35,979 $ 35,092 $ 887 $ 35,092 $ 37,311 $ (2,219) ________________________________________ (1) Same store excludes 1305 Dock Street, Chronicle Mill, and The Everly as well as properties that were disposed in 2022.
We are currently in compliance with all covenants under the M&T term loan agreement. 54 Table of Contents Consolidated Indebtedness The following table sets forth our consolidated indebtedness as of December 31, 2022 ($ in thousands): Secured Debt Amount Outstanding Interest Rate (a) Effective Rate for Variable-Rate Debt Maturity Date Balance at Maturity Chronicle Mill $ 27,630 LIBOR+ 3.00% 5.39 % May 5, 2024 $ 27,630 Red Mill Central 2,013 4.80% June 17, 2024 1,765 Premier Apartments (b) 16,269 LIBOR+ 1.55% 5.94 % October 31, 2024 15,830 Premier Retail (b) 8,013 LIBOR+ 1.55% 5.94 % October 31, 2024 7,797 Red Mill South 5,191 3.57% May 1, 2025 4,383 Market at Mill Creek 12,494 LIBOR+ 1.55% 5.94 % July 12, 2025 10,876 Gainesville Apartments 30,000 SOFR+ 1.50% 5.86 % December 20, 2025 30,000 Encore Apartments (c) 23,980 2.93% February 10, 2026 22,211 4525 Main Street (c) 30,785 2.93% February 10, 2026 28,515 Southern Post (d) — SOFR+ 2.25% 4.61 % August 25, 2026 — Thames Street Wharf 69,327 BSBY+ 1.30% 2.35 % (e) September 30, 2026 60,839 Constellation Energy Building 175,000 BSBY+ 1.50% 3.86 % November 1, 2026 175,000 Southgate Square 26,195 LIBOR+ 1.90% 6.29 % December 21, 2026 22,811 Nexton Square 22,195 SOFR+ 1.95% 6.31 % June 30, 2027 19,487 Liberty Apartments 20,926 SOFR+ 1.50% 5.86 % September 27, 2027 19,243 Greenbrier Square 19,940 3.74% October 10, 2027 18,049 Lexington Square 13,892 4.50% September 1, 2028 12,044 Red Mill North 4,079 4.73% December 31, 2028 3,295 Greenside Apartments 31,862 3.17% December 15, 2029 26,095 Smith's Landing 15,535 4.05% June 1, 2035 384 Edison Apartments 15,563 5.30% December 1, 2044 100 The Cosmopolitan 41,243 3.35% July 1, 2051 187 Total secured debt $ 612,132 $ 506,541 Unsecured Debt Senior unsecured revolving credit facility $ 61,000 SOFR+ 1.30%-1.85% 5.76 % January 22, 2027 $ 61,000 M&T unsecured term loan 100,000 SOFR+ 1.25%-1.80% 4.80 % (e) March 8, 2027 100,000 Senior unsecured term loan 31,658 SOFR+ 1.25%-1.80% 5.66 % January 21, 2028 31,658 Senior unsecured term loan 268,342 SOFR+ 1.25%-1.80% 1.80%-4.73% (e) January 21, 2028 268,342 Total unsecured debt 461,000 461,000 Total principal balances 1,073,132 $ 967,541 Other note payable (f) 6,131 Unamortized GAAP adjustments (11,002) Indebtedness, net $ 1,068,261 _______________________________________ (a) LIBOR, SOFR, and BSBY rates are determined by individual lenders.
We are currently in compliance with all covenants under the TD term loan agreement. 62 Table of Contents Consolidated Indebtedness The following table sets forth our consolidated indebtedness as of December 31, 2023 ($ in thousands): Secured Debt Amount Outstanding Interest Rate (a) Effective Rate for Variable-Rate Debt Maturity Date (b) Balance at Maturity Chronicle Mill $ 34,438 SOFR+ 3.00% 6.47 % May 5, 2024 $ 34,438 Red Mill Central 1,838 4.80% June 17, 2024 1,765 Premier Apartments (c) 16,036 SOFR+ 1.55% 7.02 % October 31, 2024 15,830 Premier Retail (c) 7,898 SOFR+ 1.55% 7.02 % October 31, 2024 7,797 Red Mill South 4,853 3.57% May 1, 2025 4,383 Market at Mill Creek 11,347 SOFR+ 1.55% 7.02 % July 12, 2025 10,376 The Everly 30,000 SOFR+ 1.50% 6.85 % December 20, 2025 30,000 Encore Apartments (d) 23,421 2.93% February 10, 2026 22,209 4525 Main Street (d) 30,074 2.93% February 10, 2026 28,517 Southern Post 30,546 SOFR+ 2.25% 5.60 % August 25, 2026 30,546 Thames Street Wharf 67,894 SOFR+ 1.30% 2.33 % (e) September 30, 2026 60,839 Constellation Energy Building 175,000 SOFR+ 1.50% 3.46 % (e) November 1, 2026 175,000 Southgate Square 25,331 SOFR+ 1.90% 7.35 % December 21, 2026 22,811 Nexton Square 21,581 SOFR+ 1.95% 7.30 % June 30, 2027 19,487 Liberty Apartments 20,588 SOFR+ 1.50% 6.85 % September 27, 2027 19,230 Greenbrier Square 19,569 3.74% October 10, 2027 18,049 Lexington Square 13,599 4.50% September 1, 2028 12,044 Red Mill North 3,963 4.73% December 31, 2028 3,295 Greenside Apartments 31,104 3.17% December 15, 2029 26,095 Smith's Landing 14,578 4.05% June 1, 2035 384 The Edison 15,179 5.30% December 1, 2044 100 The Cosmopolitan 40,367 3.35% July 1, 2051 187 Total secured debt $ 639,204 $ 543,382 Unsecured Debt TD unsecured term loan $ 95,000 SOFR+ 1.35%-1.90% 4.70 % (e) May 19, 2025 $ 95,000 Senior unsecured revolving credit facility 262,000 SOFR+ 1.30%-1.85% 6.85 % January 22, 2027 262,000 Senior unsecured revolving credit facility (fixed) 5,000 SOFR+ 1.30%-1.85% 4.70 % (e) January 22, 2027 5,000 M&T unsecured term loan 100,000 SOFR+ 1.25%-1.80% 4.90 % (e) March 8, 2027 100,000 Senior unsecured term loan 125,000 SOFR+ 1.25%-1.80% 6.75 % January 21, 2028 125,000 Senior unsecured term loan (fixed) 175,000 SOFR+ 1.25%-1.80% 1.73%-4.83% (e) January 21, 2028 175,000 Total unsecured debt 762,000 762,000 Total principal balances $ 1,401,204 $ 1,305,382 Other note payable (f) 6,127 Unamortized GAAP adjustments (10,366) Indebtedness, net $ 1,396,965 _______________________________________ (a) SOFR is determined by individual lenders.
Additionally, the estimated costs at completion are affected by management’s forecasts of anticipated costs to be incurred and contingency reserves for exposures related to unknown costs, such as design deficiencies and subcontractor defaults. The estimated variable consideration is also affected by claims and unapproved change orders, which may result from changes in the scope of the contract.
Additionally, the estimated costs at completion are affected by management’s forecasts of anticipated costs to be incurred and contingency reserves for exposures related to unknown costs, 47 Table of Contents such as design deficiencies and subcontractor defaults.
We consider factors such as the progress of development activities, including leasing activities, projected development costs, current and projected loan balances. We also consider historical industry data, such as loan defaults and losses experienced on loans secured by other development projects, and current economic conditions that may affect the collectability of the remaining cash flows.
We also consider historical industry data, such as loan defaults and losses experienced on loans secured by other development projects, and current economic conditions that may affect the collectability of the remaining cash flows. We measure expected credit losses to be incurred over the remaining contractual term based on the risk rating of each loan.
Rental revenues for the year ended December 31, 2022 increased $26.7 million, or 56.3%, compared to the year ended December 31, 2021. NOI for the year ended December 31, 2022 increased $18.9 million, or 65.4%, compared to the year ended December 31, 2021.
Rental revenues for the year ended December 31, 2023 increased $11.4 million, or 13.2%, compared to the year ended December 31, 2022. NOI for the year ended December 31, 2023 increased $9.1 million, or 14.3%, compared to the year ended December 31, 2022.
As of December 31, 2022, we were in compliance with all loan covenants. 55 Table of Contents As of December 31, 2022, our scheduled principal repayments and maturities during each of the next five years and thereafter were as follows ($ in thousands): Year (1) Amount Due Percentage of Total 2023 $ 9,770 1 % 2024 63,398 6 % 2025 55,995 5 % 2026 317,526 30 % 2027 222,575 20 % Thereafter 403,868 38 % Total $ 1,073,132 100 % ________________________________________ (1) Does not reflect the exercise of any maturity extension options.
As of December 31, 2023, we were in compliance with all loan covenants. 63 Table of Contents As of December 31, 2023, our scheduled principal repayments and maturities during each of the next five years and thereafter were as follows ($ in thousands): Year (1) Amount Due Percentage of Total 2024 $ 70,207 5 % 2025 150,495 11 % 2026 348,072 25 % 2027 428,562 31 % 2028 319,322 22 % Thereafter 84,546 6 % Total $ 1,401,204 100 % ________________________________________ (1) Does not reflect the exercise of any maturity extension options.
(b) Cross collateralized. (c) Cross collateralized. (d) No funding on the construction loan as of December 31, 2022. (e) Includes debt subject to interest rate swap agreements. (f) Represents the fair value of additional ground lease payments at 1405 Point over the approximately 40-year remaining lease term.
(b) Does not reflect the effect of any maturity extension options. (c) Cross collateralized. (d) Cross collateralized. (e) Includes debt subject to interest rate swap locks. (f) Represents the fair value of additional ground lease payments at 1405 Point over the approximately 39-year remaining lease term.
Rental revenues by segment for the years ended December 31, 2022, 2021, and 2020 were as follows (in thousands): Years Ended December 31, 2022 2021 2022 2021 2020 Change Change Office $ 74,036 $ 47,363 $ 43,494 $ 26,673 $ 3,869 Retail 86,344 78,572 73,032 7,772 5,540 Multifamily 58,914 66,205 49,962 (7,291) 16,243 $ 219,294 $ 192,140 $ 166,488 $ 27,154 $ 25,652 49 Table of Contents Rental revenues increased $27.2 million during the year ended December 31, 2022 compared to the year ended December 31, 2021.
Rental revenues by segment for the years ended December 31, 2023, 2022, and 2021 were as follows (in thousands): Years Ended December 31, 2023 2022 2023 2022 2021 Change Change Retail $ 97,762 $ 86,344 $ 78,572 $ 11,418 $ 7,772 Office 82,517 74,036 47,363 8,481 26,673 Multifamily 58,645 58,914 66,205 (269) (7,291) $ 238,924 $ 219,294 $ 192,140 $ 19,630 $ 27,154 55 Table of Contents Rental revenues increased $19.6 million, or 9.0%, during the year ended December 31, 2023 compared to the year ended December 31, 2022.
The increases in rental revenues and NOI resulted primarily due to the acquisition of the Constellation Office in January 2022.
The increases in rental revenues and NOI resulted primarily due to the acquisition of The Interlock Retail in May 2023 and Pembroke Square in November 2022.
Multifamily rental expenses decreased primarily as a result of the dispositions of John Hopkins Village, Summit Place, Hoffler Place, and The Residences at Annapolis Junction, partially offset by the acquisition of 1305 Dock Street and the commencement of operations at Gainesville Apartments and Chronicle Mill. Real estate taxes.
Multifamily rental expenses decreased primarily as a result of the disposition of The Residences at Annapolis Junction in July 2022, partially offset by the commencement of operations at Chronicle Mill and The Everly. Real estate taxes.
Subject to available borrowing capacity, we intend to use future borrowings under the amended credit facility for general corporate purposes, including funding acquisitions, mezzanine lending, and development and redevelopment of properties in our portfolio, and for working capital.
Subject to available borrowing capacity, we intend to use future borrowings under the amended credit facility for general corporate purposes, including funding acquisitions, mezzanine lending, and development and redevelopment of properties in our portfolio, and for working capital. 58 Table of Contents The amended credit facility includes an accordion feature that allows the total commitments to be increased to $1.0 billion, subject to certain conditions, including obtaining commitments from any one or more lenders.
Provisions for estimated losses on uncompleted contracts are recognized immediately in the period in which such losses are determined. We recognize real estate services revenues from property development and management as we satisfy our performance obligations under these service arrangements.
We recognize real estate services revenues from property development and management as we satisfy our performance obligations under these service arrangements.
If a loan is rated as substandard, we then estimate expected credit losses as the difference between the amortized cost basis of the outstanding loan and the estimated projected sales proceeds of the underlying collateral.
See Note 2 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for details on risk rating determination. If a loan is rated as substandard, we then estimate expected credit losses as the difference between the amortized cost basis of the outstanding loan and the estimated projected sales proceeds of the underlying collateral.
NOI decreased $2.2 million, or 5.9%, compared to the year ended December 31, 2021. The decreases in rental revenues and NOI resulted primarily from the dispositions of The Residences at Annapolis Junction, John Hopkins Village, Hoffler Place, and Summit Place.
NOI for the year ended December 31, 2023 increased $0.9 million, or 2.5%, compared to the year ended December 31, 2022. The increase in NOI was primarily due to a decrease in property expenses resulting from the 2022 dispositions of The Residences at Annapolis Junction, Hoffler Place, and Summit Place.
Depreciation and amortization for the year ended December 31, 2022 increased $4.1 million compared to the year ended December 31, 2021. The increase was attributable to property acquisitions and development deliveries.
Depreciation and amortization for the year ended December 31, 2023 increased $23.1 million, or 31.7%, compared to the year ended December 31, 2022.
Retail Same Store Results Retail same store rental revenues, property expenses, and NOI for the comparative years ended December 31, 2022 and 2021 and December 31, 2021 and 2020 were as follows (in thousands): Years Ended Years Ended December 31, December 31, 2022 (1) 2021 (1) Change 2021 (2) 2020 (2) Change Rental revenues $ 73,436 $ 69,256 $ 4,180 $ 64,006 $ 63,147 $ 859 Property expenses 18,400 17,636 764 15,898 15,469 429 Same Store NOI $ 55,036 $ 51,620 $ 3,416 $ 48,108 $ 47,678 $ 430 Non-Same Store NOI 8,666 6,024 2,642 9,536 6,541 2,995 Segment NOI $ 63,702 $ 57,644 $ 6,058 $ 57,644 $ 54,219 $ 3,425 ________________________________________ (1) Same store excludes Greenbrier Square, Overlook Village, Delray Beach Plaza, Premier Retail, and Pembroke Square.
Retail Same Store Results Retail same store rental revenues, property expenses, and NOI for the comparative years ended December 31, 2023 and 2022 and December 31, 2022 and 2021 were as follows (in thousands): Years Ended Years Ended December 31, December 31, 2023 (1) 2022 (1) Change 2022 (2) 2021 (2) Change Rental revenues $ 87,019 $ 84,100 $ 2,919 $ 73,436 $ 69,256 $ 4,180 Property expenses 21,164 21,028 136 18,400 17,636 764 Same Store NOI $ 65,855 $ 63,072 $ 2,783 $ 55,036 $ 51,620 $ 3,416 Non-Same Store NOI 6,931 630 6,301 8,666 6,024 2,642 Segment NOI $ 72,786 $ 63,702 $ 9,084 $ 63,702 $ 57,644 $ 6,058 ________________________________________ (1) Same store excludes Pembroke Square and The Interlock Retail, as well as Columbus Village II due to redevelopment.
We may, at any time, voluntarily prepay any loan under the amended credit facility in whole or in part without premium or penalty.
We may, at any time, voluntarily prepay any loan under the amended credit facility in whole or in part without premium or penalty. Our unencumbered borrowing pool will support revolving borrowings of up to $343.3 million as of December 31, 2023.
General Contracting and Real Estate Services Segment Data General contracting and real estate services revenues, expenses, and gross profit for the years ended December 31, 2022, 2021, and 2020 were as follows ($ in thousands): Years Ended December 31, 2022 2021 2020 Segment revenues $ 234,859 $ 91,936 $ 217,146 Gross profit $ 7,701 $ 3,836 $ 7,674 Operating margin 3.3 % 4.2 % 3.5 % Construction backlog $ 665,565 $ 215,519 $ 71,258 Segment revenues for the year ended December 31, 2022 increased $142.9 million compared to the year ended December 31, 2021.
The increases in same store rental revenues and same store NOI resulted primarily from increased rental rates across multiple properties. 52 Table of Contents General Contracting and Real Estate Services Segment Data General contracting and real estate services revenues, expenses, and gross profit for the years ended December 31, 2023, 2022, and 2021 were as follows ($ in thousands): Years Ended December 31, 2023 2022 2021 Segment revenues $ 413,131 $ 234,859 $ 91,936 Gross profit $ 13,418 $ 7,701 $ 3,836 Operating margin (1) 3.2 % 3.3 % 4.2 % Construction backlog $ 472,170 $ 665,565 $ 215,519 ________________________________________ (1) 50% and 90% of gross profit attributable to our T.
In connection with our Harbor Point Parcel 3 unconsolidated joint venture, we will be responsible for providing a completion guarantee to the lender for this project when a construction loan is obtained.
In connection with our Harbor Point Parcel 3 unconsolidated joint venture, we are responsible for providing a completion guarantee to the lender for this project. Unfunded Loan Commitments We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our borrowers.
During the year ended December 31, 2022, we did not issue any shares of Series A Preferred Stock under the ATM Program. As of December 31, 2022, we had $205.0 million in availability under the ATM Program.
During the year ended December 31, 2023, we did not issue any shares of common stock or Series A Preferred Stock under the ATM Program. Shares having an aggregate offering price of $205.0 million remained unsold under the ATM Program as of February 23, 2024. Share Repurchase Program On June 15, 2023, we adopted the $50.0 million Share Repurchase Program.
Our unencumbered borrowing pool will support revolving borrowings of up to $250.0 million as of December 31, 2022. 52 Table of Contents The Operating Partnership is the borrower under the amended credit facility, and its obligations under the amended credit facility are guaranteed by us and certain of our subsidiaries that are not otherwise prohibited from providing such guaranty.
The Operating Partnership is the borrower under the amended credit facility, and its obligations under the amended credit facility are guaranteed by us and certain of our subsidiaries that are not otherwise prohibited from providing such guaranty. The Credit Agreement contains customary representations and warranties and financial and other affirmative and negative covenants.
Multifamily Segment Data Multifamily rental revenues, property expenses, and NOI for the years ended December 31, 2022, 2021, and 2020 were as follows ($ in thousands): Years Ended December 31, 2022 2021 2020 Rental revenues $ 58,914 $ 66,205 $ 49,962 Property expenses 23,822 28,894 22,373 NOI $ 35,092 $ 37,311 $ 27,589 Apartment units/beds 2,254 2,959 3,527 Occupancy 96.1 % 97.4 % 92.5 % Rental revenues for the year ended December 31, 2022 decreased $7.3 million, or 11.0%, compared to the year ended December 31, 2021.
The decreases in same store rental revenues and same store NOI resulted primarily from an increase in non-recurring straight-line rent write-offs at One City Center in connection with WeWork's bankruptcy. 51 Table of Contents Multifamily Segment Data Multifamily rental revenues, property expenses, and NOI for the years ended December 31, 2023, 2022, and 2021 were as follows ($ in thousands): Years Ended December 31, 2023 2022 2021 Rental revenues $ 58,645 $ 58,914 $ 66,205 Property expenses 22,666 23,822 28,894 NOI $ 35,979 $ 35,092 $ 37,311 Apartment units/beds 2,492 2,254 2,959 Occupancy 95.5 % 96.1 % 97.4 % Rental revenues for the year ended December 31, 2023 decreased $0.3 million, or less than 1%, compared to the year ended December 31, 2022, primarily due to the disposition of The Residences at Annapolis Junction in July 2022, partially offset by the commencement of operations at Chronicle Mill and The Everly.
NOI (segment revenues minus segment expenses) is the measure used by management to assess segment performance and allocate our resources among our segments. 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.
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, NOI should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate NOI in the same manner.
Change in fair value of derivatives and other for the year ended December 31, 2022 was a gain of $8.7 million, which arose from increases in forward LIBOR, SOFR and BSBY.
Change in fair value of derivatives and other for the year ended December 31, 2023 was a loss of $6.2 million, which primarily arose from decreases in the forward Secured Overnight Financing Rate ("SOFR"), as well as the London Inter-Bank Offered Rate ("LIBOR") and the Bloomberg Short-Term Bank Yield Index ("BSBY").
Unfunded Loan Commitments We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our borrowers. These commitments are not reflected on the consolidated balance sheet. As of December 31, 2022 , our off-balance sheet arrangements consisted of $18.2 million of unfunded commitments of our notes receivable.
These commitments are not reflected on the consolidated balance sheet. As of December 31, 2023, our off-balance sheet arrangements consisted of $46.3 million of unfunded commitments of our notes receivable. We have recorded a $0.7 million credit loss reserve in conjunction with the total unfunded commitments.
The increase was partially offset by dispositions in 2022. 50 Table of Contents Amortization of right-of-use assets - finance leases for the years ended December 31, 2022 and 2021 were materially consistent. General and administrative expenses for the year ended December 31, 2022 increased $1.1 million compared to the year ended December 31, 2021.
Amortization of right-of-use assets - finance leases for the year ended December 31, 2023 increased $0.2 million compared to the year ended December 31, 2022. The increase resulted primarily from the addition of a ground lease in conjunction with the acquisition of The Interlock. General and administrative expenses.
The commitments may or may not be funded depending on a variety of circumstances including timing, credit metric hurdles, and other nonfinancial events occurring. 57 Table of Contents Cash Flows Years Ended December 31, 2022 2021 Change ($ in thousands) Operating Activities $ 116,858 $ 91,184 $ 25,674 Investing Activities (33,242) (57,629) 24,387 Financing Activities (72,194) (43,542) (28,652) Net Increase/(decrease) $ 11,422 $ (9,987) $ 21,409 Cash, Cash Equivalents, and Restricted Cash, Beginning of Period $ 40,443 $ 50,430 Cash, Cash Equivalents, and Restricted Cash, End of Period $ 51,865 $ 40,443 Years Ended December 31, 2021 2020 Change ($ in thousands) Operating Activities $ 91,184 $ 91,179 $ 5 Investing Activities (57,629) (26,227) (31,402) Financing Activities (43,542) (58,101) 14,559 Net Increase $ (9,987) $ 6,851 $ (16,838) Cash, Cash Equivalents, and Restricted Cash, Beginning of Period $ 50,430 $ 43,579 Cash, Cash Equivalents, and Restricted Cash, End of Period $ 40,443 $ 50,430 Net cash provided by operating activities for the year ended December 31, 2022 increased by $25.7 million compared to the year ended December 31, 2021 primarily as a result of increased net operating income from the property portfolio and an increase in gross profit from general contracting and real estate services, slightly offset by timing differences in operating assets and liabilities.
Cash Flows Years Ended December 31, 2023 2022 Change ($ in thousands) Operating Activities $ 93,314 $ 116,858 $ (23,544) Investing Activities (237,266) (33,242) (204,024) Financing Activities 122,253 (72,194) 194,447 Net Increase/(decrease) $ (21,699) $ 11,422 $ (33,121) Cash, Cash Equivalents, and Restricted Cash, Beginning of Period $ 51,865 $ 40,443 Cash, Cash Equivalents, and Restricted Cash, End of Period $ 30,166 $ 51,865 Years Ended December 31, 2022 2021 Change ($ in thousands) Operating Activities $ 116,858 $ 91,184 $ 25,674 Investing Activities (33,242) (57,629) 24,387 Financing Activities (72,194) (43,542) (28,652) Net Increase $ 11,422 $ (9,987) $ 21,409 Cash, Cash Equivalents, and Restricted Cash, Beginning of Period $ 40,443 $ 50,430 Cash, Cash Equivalents, and Restricted Cash, End of Period $ 51,865 $ 40,443 Net cash provided by operating activities for the year ended December 31, 2023 decreased by $23.5 million compared to the year ended December 31, 2022.
Gross profit for the year ended December 31, 2022 increased $3.9 million compared to the year ended December 31, 2021.
Same store NOI for the year ended December 31, 2023 increased $2.8 million, or 4.4%, compared to the year ended December 31, 2022.
Ending backlog as of December 31, 2022 included $353.7 million in contracts with Beatty Development Group and $292.9 million in contracts with Dominion Realty Partners. During the year ended December 31, 2021, we executed $181.6 million of new contracts with Dominion Realty Partners and $16.1 million in contracts with Beatty Development Group.
During the year ended December 31, 2022, we executed new contracts or change orders with Beatty Development Group related to the Harbor Point development in Baltimore totaling $423.8 million in addition to $246.9 million of new contracts with Dominion Realty Partners.
If management cannot make this determination, recognition of interest income may be fully or partially deferred until it is ultimately paid. Expected Credit Losses We evaluate the collectability of both the interest on and principal of each of our notes receivable based primarily upon the value of the underlying development project.
If management cannot make this determination, recognition of interest income may be fully or partially deferred until it is ultimately paid. Interest income is also accrued as earned on interest-bearing deposits.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. 45 Table of Contents Office Segment Data Office rental revenues, property expenses, and NOI for the years ended December 31, 2022, 2021, and 2020 were as follows ($ in thousands): Years Ended December 31, 2022 2021 2020 Rental revenues $ 74,036 $ 47,363 $ 43,494 Property expenses 26,335 18,524 15,910 NOI $ 47,701 $ 28,839 $ 27,584 Square feet (1) 2,111,923 1,301,319 1,305,933 Occupancy (1) 96.7 % 96.8 % 97.0 % ________________________________________ (1) Stabilized properties as of the end of the periods presented.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 49 Table of Contents 10-K can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
During the year ended December 31, 2021, we recognized gain on changes in fair value of interest rate derivatives of $2.2 million due to significant increases in forward LIBOR during 2021.
The loss is also due to an increase in derivatives outstanding that are not designated as hedges for accounting purposes. The loss was partially offset by realized gains. During the year ended December 31, 2022, we recognized gain on changes in fair value of interest rate derivatives of $8.7 million due to increases in forward SOFR, LIBOR, and BSBY.
General contracting and real estate services revenues. General contracting and real estate services revenues increased $142.9 million during the year ended December 31, 2022 compared to the year ended December 31, 2021.
General contracting and real estate services revenues increased $178.3 million, or 75.9%, during the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase resulted primarily from the timing of new third-party construction projects in 2023 and higher contract volume. Interest income.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeConsidering interest rate swaps and caps, 100.0% of our outstanding debt is either fixed rate or economically hedged. As of December 31, 2022, LIBOR was approximately 439 basis points, SOFR was approximately 436 basis points, and BSBY was approximately 436 basis points.
Biggest changeAs of December 31, 2023 and excluding unamortized GAAP adjustments, 100.0% of our outstanding debt is either fixed rate or economically hedged after the effect of interest rate swaps and caps. As of December 31, 2023, SOFR was approximately 535 basis points.
Assuming no change in the level of our variable-rate debt or derivative instruments, if interest rates were to increase by 100 basis points, our cash flow would decrease by approximately $0.6 million per year.
Assuming no change in the level of our variable-rate debt or derivative instruments, if interest rates were to increase by 100 basis points, our cash flow would increase by approximately $3.0 million per year.
Assuming no change in the level of our variable-rate debt or derivative instruments, if interest rates were reduced by 100 basis points, our cash flow would increase by approximately $1.7 million per year.
Assuming no change in the level of our variable-rate debt or derivative instruments, if interest rates were reduced by 100 basis points, our cash flow would decrease by approximately $3.0 million per year. 68 Table of Contents
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The primary market risk to which we are exposed is interest rate risk. Our primary interest rate exposure is LIBOR, SOFR and BSBY. We primarily use fixed interest rate financing to manage our exposure to fluctuations in interest rates. We also use derivative financial instruments to manage interest rate risk.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The primary market risk to which we are exposed is interest rate risk. Our primary interest rate exposure is SOFR. We use fixed interest rate financing and derivative financial instruments to manage interest rate risk. We do not use derivatives for trading or other speculative purposes.
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We do not use these derivatives for trading or other speculative purposes. As of December 31, 2022 and excluding unamortized GAAP adjustments, approximately $641.8 million, or 59.8%, of our debt had fixed interest rates or was subject to interest rate swaps and approximately $431.3 million, or 40.2%, had variable interest rates.

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