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What changed in Armada Hoffler Properties, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Armada Hoffler Properties, Inc.'s 2023 and 2024 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 2024 report.

+360 added−344 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-29)

Top changes in Armada Hoffler Properties, Inc.'s 2024 10-K

360 paragraphs added · 344 removed · 262 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

65 edited+32 added−26 removed65 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 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.
Biggest changeAdditionally, 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. 3 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) Retail Town Center of Virginia Beach 249 Central Park Retail* Virginia Beach, VA 2004 100 % 35,161 100.0 % $ 1,177,891 $ 33.50 4525 Main Street Retail* Virginia Beach, VA 2014 100 % 26,328 100.0 % 485,188 18.43 4621 Columbus Retail* (4) Virginia Beach, VA 2020 100 % 84,000 100.0 % 1,176,000 14.00 Columbus Village* Virginia Beach, VA 2020 100 % 62,207 100.0 % 2,022,540 32.51 Commerce Street Retail* Virginia Beach, VA 2008 100 % 19,173 100.0 % 890,078 46.42 Fountain Plaza Retail* Virginia Beach, VA 2004 100 % 35,961 94.4 % 1,119,318 32.98 Pembroke Square* Virginia Beach, VA 2015 100 % 124,181 100.0 % 2,096,262 16.88 Premier Retail* Virginia Beach, VA 2018 100 % 39,015 94.9 % 1,254,924 33.88 South Retail* Virginia Beach, VA 2002 100 % 38,515 100.0 % 1,065,261 27.66 Studio 56 Retail* Virginia Beach, VA 2007 100 % 11,594 100.0 % 413,118 35.63 The Cosmopolitan Retail* Virginia Beach, VA 2020 100 % 41,872 88.6 % 1,220,239 32.90 Two Columbus Retail* Virginia Beach, VA 2009 100 % 13,752 100.0 % 526,978 38.32 West Retail* Virginia Beach, VA 2002 100 % 17,558 83.4 % 494,102 33.74 Harbor Point - Baltimore Waterfront Constellation Retail* Baltimore, MD 2016 90 % 38,464 76.7 % 783,891 26.58 Point Street Retail* Baltimore, MD 2018 100 % 18,632 60.8 % 439,665 38.82 Grocery Anchored Broad Creek Shopping Center (5) Norfolk, VA 2001 100 % 121,504 97.2 % 2,330,199 19.74 Broadmoor Plaza South Bend, IN 1980 100 % 115,059 98.2 % 1,359,075 12.03 Brooks Crossing Retail* Newport News, VA 2016 65 % (6) 18,349 84.8 % 229,537 14.75 Delray Beach Plaza* (5) Delray Beach, FL 2021 100 % 87,207 98.0 % 2,959,879 34.62 Greenbrier Square Chesapeake, VA 2017 100 % 260,625 100.0 % 2,624,984 10.07 Greentree Shopping Center Chesapeake, VA 2014 100 % 15,719 91.1 % 335,615 23.44 Hanbury Village Chesapeake, VA 2009 100 % 98,638 100.0 % 2,045,579 20.74 Lexington Square Lexington, SC 2017 100 % 85,440 97.2 % 1,892,535 22.79 North Pointe Center Durham, NC 2009 100 % 226,083 100.0 % 2,996,368 13.25 Parkway Centre Moultrie, GA 2017 100 % 61,200 100.0 % 861,149 14.07 Parkway Marketplace Virginia Beach, VA 1998 100 % 37,804 94.2 % 712,610 20.01 Perry Hall Marketplace Perry Hall, MD 2001 100 % 74,251 100.0 % 1,299,008 17.49 Sandbridge Commons Virginia Beach, VA 2015 100 % 69,417 100.0 % 951,730 13.71 Tyre Neck Harris Teeter (5) Portsmouth, VA 2011 100 % 48,859 100.0 % 559,948 11.46 Southeast Sunbelt Chronicle Mill Retail* Belmont, NC 2022 85 % (6) 11,530 22.4 % 112,500 43.50 North Hampton Market Taylors, SC 2004 100 % 114,954 98.8 % 1,605,665 14.14 One City Center Retail* Durham, NC 2019 100 % 22,679 55.7 % 421,442 33.38 Overlook Village Asheville, NC 1990 100 % 151,365 100.0 % 2,289,281 15.12 Patterson Place Durham, NC 2004 100 % 159,842 99.1 % 2,682,119 16.93 Providence Plaza Retail* Charlotte, NC 2008 100 % 49,447 100.0 % 1,565,800 31.67 South Square Durham, NC 2005 100 % 109,590 97.1 % 1,935,908 18.19 The Interlock Retail* (5) Atlanta, GA 2021 100 % 108,379 85.0 % 5,071,860 55.08 Wendover Village Greensboro, NC 2004 100 % 176,997 99.3 % 3,635,403 20.69 Mid-Atlantic Dimmock Square Colonial Heights, VA 1998 100 % 106,166 100.0 % 1,932,887 18.21 Harrisonburg Regal Harrisonburg, VA 1999 100 % 49,000 100.0 % 753,620 15.38 Liberty Retail* Newport News, VA 2013 100 % 26,534 75.8 % 371,241 18.45 Marketplace at Hilltop (5) Virginia Beach, VA 2001 100 % 116,953 97.3 % 2,810,566 24.71 Red Mill Commons Virginia Beach, VA 2005 100 % 373,808 96.1 % 7,118,113 19.81 Southgate Square Colonial Heights, VA 2016 100 % 260,131 81.2 % 3,256,484 15.42 Southshore Shops Midlothian, VA 2006 100 % 40,307 100.0 % 885,326 21.96 The Edison Retail* Richmond, VA 2014 100 % 20,196 — % 58,276 — Total / Weighted Average 3,824,446 95.3 % $ 72,830,162 $ 19.98 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 249 Central Park Office* Virginia Beach, VA 2004 100 % 57,103 100.0 % $ 1,448,997 $ 25.38 4525 Main Street Office* Virginia Beach, VA 2014 100 % 208,760 100.0 % 6,932,898 33.21 4605 Columbus Office* Virginia Beach, VA 2002 100 % 19,335 100.0 % 522,045 27.00 Armada Hoffler Tower* (7) Virginia Beach, VA 2002 100 % 296,200 98.6 % 9,196,624 31.49 One Columbus* Virginia Beach, VA 1984 100 % 129,066 98.3 % 3,416,942 26.93 Two Columbus Office* Virginia Beach, VA 2009 100 % 94,708 91.6 % 2,402,802 27.68 Harbor Point - Baltimore Waterfront Constellation Office* Baltimore, MD 2016 90 % 453,018 100.0 % 15,484,541 34.18 Thames Street Wharf* (7) Baltimore, MD 2010 100 % 263,426 98.8 % 8,071,078 31.01 Wills Wharf* (5) Baltimore, MD 2020 100 % 327,991 93.8 % 9,471,823 30.79 Southeast Sunbelt Chronicle Mill Office* Belmont, NC 2022 85 % (6) 5,932 100.0 % 177,960 30.00 One City Center Office* Durham, NC 2019 100 % 128,920 95.3 % 3,270,013 26.63 Providence Plaza Office* Charlotte, NC 2008 100 % 53,671 100.0 % 1,636,062 30.48 The Interlock Office* (5) Atlanta, GA 2021 100 % 198,872 88.6 % 6,845,907 38.84 Mid-Atlantic Brooks Crossing Office* Newport News, VA 2019 100 % 98,061 100.0 % 2,002,945 20.43 Total / Weighted Average 2,335,063 97.2 % $ 70,880,637 $ 31.24 Property Location Year Built / Renovated / Redeveloped Ownership Interest Units Occupancy (2) AQR (8) Monthly Rent per Occupied Unit Multifamily Town Center of Virginia Beach Encore Apartments* Virginia Beach, VA 2014 100 % 286 93.7 % $ 5,862,228 $ 1,823 Premier Apartments* Virginia Beach, VA 2018 100 % 131 96.2 % 3,046,848 2,015 The Cosmopolitan* Virginia Beach, VA 2020 100 % 342 93.9 % 8,972,952 2,329 Harbor Point - Baltimore Waterfront 1305 Dock Street* Baltimore, MD 2016 90 % 103 96.1 % 3,115,440 2,622 1405 Point* (5) Baltimore, MD 2018 100 % 289 94.5 % 8,844,300 2,700 Southeast Sunbelt Chronicle Mill Apartments* Belmont, NC 2022 85 % (6) 238 96.6 % 5,055,672 1,832 Greenside Apartments Charlotte, NC 2018 100 % 225 90.7 % 4,598,520 1,878 The Everly* Gainesville, GA 2022 100 % 223 95.5 % 4,596,096 1,798 Mid-Atlantic Liberty Apartments* Newport News, VA 2013 100 % 197 98.5 % 4,070,124 1,748 Smith's Landing (5) Blacksburg, VA 2009 100 % 284 100.0 % 6,121,680 1,796 The Edison* Richmond, VA 2014 100 % 174 94.3 % 3,176,436 1,614 Total / Weighted Average 2,492 95.3 % $ 57,460,296 $ 2,015.30 ________________________________________ * Mixed-use asset or located in a mixed-use development.
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.
However, some of the construction companies with which we compete have different cost structures and greater financial and other resources than we 14 Table of Contents do, which may put them at an advantage when competing with us for construction projects.
In addition, as soon as reasonably practicable after such materials are furnished to the SEC, we make copies of these documents available to the public free of charge through our website or by contacting our Corporate Secretary at the address set forth above under "—Corporate Information." Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, and the charters of our audit committee, compensation committee and nominating and corporate governance committee are all available in the Corporate Governance section of the Investor Relations section of our website.
In addition, as soon as reasonably practicable after such materials are furnished to the SEC, we make copies of these documents available to the public free of charge through our website or by contacting our Corporate Secretary at the address set forth above under "—Corporate Information." Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, and the charters of our audit committee, compensation committee and nominating and corporate governance committee are all available in the Governance section of the Investor Relations section of our website.
(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).
(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, 2024 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).
Our investment bears interest at a rate of 14.0% for the first 24 months. Beginning on May 25, 2025, the investment will bear interest at a rate of 9.0% for 12 months. On May 25, 2026, the investment will again bear interest at a rate of 14.0% through maturity. The interest compounds annually.
Our investment bears interest at a rate of 14.0% for the first 24 months. Beginning on May 25, 2025, the investment will bear interest at a rate of 9.0% for the following 12 months. On May 25, 2026, the investment will again bear interest at a rate of 14.0% through maturity. The interest compounds annually.
See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K. 10 Table of Contents Solis Peachtree Corners On July 26, 2023, we entered into a $28.4 million preferred equity investment for the development of a multifamily property located in Peachtree Corners, Georgia ("Solis Peachtree Corners").
See Note 7 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K. 10 Table of Contents Solis Peachtree Corners On July 26, 2023, we entered into a $28.4 million preferred equity investment for the development of a multifamily property located in Peachtree Corners, Georgia ("Solis Peachtree Corners").
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.
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, 2024, divided by (b) net rentable square feet, expressed as a percentage.
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").
See Note 7 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 $9.2 million preferred equity investment for the development of a multifamily property located in Chesapeake, Virginia ("The Allure at Edinburgh").
Corporate Information Our principal executive office is located at 222 Central Park Avenue, Suite 2100, Virginia Beach, Virginia 23462 in the Armada Hoffler Tower at the Town Center of Virginia Beach. In addition, we have a construction office located at 1300 Thames Street, Suite 30, Baltimore, Maryland 21231 in Thames Street Wharf at Harbor Point.
Corporate Information Our principal executive office is located at 222 Central Park Avenue, Suite 1000, Virginia Beach, Virginia 23462 in the Armada Hoffler Tower at the Town Center of Virginia Beach. In addition, we have a construction office located at 1300 Thames Street, Suite 30, Baltimore, Maryland 21231 in Thames Street Wharf at Harbor Point.
In addition, we maintain a variety of other governance documents, including, among others, a Human Rights Policy, an Environmental Policy, a Vendor Conduct Policy, and the charter of our Sustainability Committee, all of which are available in the Corporate Governance section of the Investor Relations section of our website.
In addition, we maintain a variety of other governance documents, including, among others, a Human Rights Policy, an Insider Trading Policy, an Environmental Policy, a Vendor Conduct Policy, and the charter of our Sustainability Committee, all of which are available in the Corporate Governance section of the Investor Relations section of our website.
Equity Method Investments - Development Equity Method Investments as of December 31, 2023 (1) ($ 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.
Equity Method Investments - Development Equity Method Investments as of December 31, 2024 (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.
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.
In addition, all but one of the properties in our portfolio as of December 31, 2024 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 13 Table of Contents 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 building.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations." Our Competitive Strengths We believe 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.
In addition, the presence of ACBM in our properties may expose us to third-party liability (e.g. liability for personal injury associated with exposure to asbestos). We are not presently aware of any material adverse issues at our properties including ACBM.
In addition, the presence of ACBM in our properties may expose us to third-party liability (e.g. liability for personal 13 Table of Contents injury associated with exposure to asbestos). We are not presently aware of any material adverse issues at our properties including ACBM.
This program includes market-competitive pay, broad-based stock grants and bonuses, healthcare benefits with company paid premiums, retirement savings plans, paid time off, paid parental leave, flexible work schedules, free flu vaccinations, an Employee Assistance Program and other mental health services.
This program includes market-competitive pay, broad-based stock grants and bonuses, healthcare benefits with company paid premiums, retirement savings plans, paid time off, paid parental leave, flexible work schedules, an Employee Assistance Program and other mental health services.
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.
Development Pipeline In addition to the properties in our operating property portfolio as of December 31, 2024, we had the following properties in various stages of development and stabilization.
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.
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.
See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
See Note 7 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
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.
ABR per leased square foot is calculated by dividing (a) ABR by (b) square footage under in-place leases as of December 31, 2024. In the case of triple net or modified gross 5 Table of Contents leases, our calculation of ABR does not include tenant reimbursements for real estate taxes, insurance, common area, or other operating expenses.
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.
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, 2024, we had 148 employees.
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.
As of December 31, 2024, our executive officers and directors collectively held a stake of approximately 10.8% 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.
We also earn an unused commitment fee of 11.0% on the unfunded portion of the investment's maximum commitment, which does not compound, and an equity fee on our commitment of $0.6 million to be amortized through redemption.
We also earn an unused commitment fee of 11.0% on the unfunded portion of the investment's maximum commitment, which does not compound, and an equity fee on our commitment of $0.6 million which is amortized through the date of redemption.
The balance on the Solis Peachtree Corners note was $11.1 million as of December 31, 2023, which includes $1.4 million of cumulative accrued interest and unused commitment fees as well as a discount of $0.4 million due to unamortized equity fees. During the year ended December 31, 2023, we recognized $1.5 million of interest income on the note.
The balance on the Solis Peachtree Corners note was $33.5 million as of December 31, 2024, which includes $3.3 million of cumulative accrued interest, $2.1 million of cumulative accrued unused commitment fees, and a discount of $0.3 million due to unamortized equity fees. During the year ended December 31, 2024, we recognized $4.1 million of interest income on the note.
(2) Estimated first full quarter of stabilized operations. Estimates are inherently uncertain, and we can provide no assurance that our assumptions regarding the timing of stabilization will prove accurate. (3) We currently have a 78% ownership interest and hold an option to increase our ownership interest to 90%.
Estimates are inherently uncertain, and we can provide no assurance that our assumptions regarding the timing of stabilization will prove accurate. (3) We currently have a 78% ownership interest and hold an option to increase our ownership interest to 90%.
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.
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. Our investment bears interest at a rate of 13%, compounded annually, with a minimum preferred return of $5.2 million, which represents approximately 24 months of interest.
(2)Represents leases that expired on December 31, 2023.
(2) Represents leases that expired on December 31, 2024.
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.
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 $115.9 million relating to this project, which was fully funded as of December 31, 2024. Plans for this project may also evolve as the development process proceeds.
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.
During the year ended December 31, 2024, we recognized $1.4 million of interest income on the note. As of December 31, 2024, this note was fully funded and the development property was approximately 24% leased. See Note 7 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
These markets demonstrate attractive fundamentals driven by favorable supply and demand characteristics, high-barrier to entry, and limited competition.
These markets demonstrate attractive fundamentals driven by favorable supply and demand characteristics, high barriers, and limited competition.
The balance on the Solis Kennesaw note was $15.9 million as of December 31, 2023, which includes $2.7 million of cumulative accrued interest and unused commitment fees as well as a discount of $0.5 million due to unamortized equity fees. During the year ended December 31, 2023, we recognized $2.8 million of interest income on the note.
The balance on the Solis Kennesaw note was $45.6 million as of December 31, 2024, which includes $5.2 million of cumulative accrued interest, $2.9 million of cumulative accrued unused commitment fees, and a discount of $0.3 million due to unamortized equity fees. During the year ended December 31, 2024, we recognized $5.4 million of interest income on the note.
The balance on the Solis Gainesville II note was $22.3 million as of December 31, 2023, which includes $2.9 million of cumulative accrued interest and unused commitment fees as well as a discount of $0.2 million due to unamortized equity fees. During the year ended December 31, 2023, we recognized $2.8 million of interest income on the note.
The balance on the Solis Gainesville II note was $25.3 million as of December 31, 2024, which includes $5.4 million of cumulative accrued interest, $0.4 million of cumulative accrued unused commitment fees, and a discount of $0.1 million due to unamortized equity fees. During the year ended December 31, 2024, we recognized $3.0 million of interest income on the note.
Tax Status We have elected and qualified to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2013.
The land parcel was classified as held-for-sale as of December 31, 2024. Tax Status We have elected and qualified to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2013.
The preferred equity investment has economic and other terms consistent with a note receivable, including a mandatory redemption feature effective on October 27, 2027. Our investment bears interest at a rate of 15.0% for the first 27 months. Beginning on November 1, 2025, the investment will bear interest at a rate of 9.0% for 12 months.
The preferred equity investment has economic and other terms consistent with a note receivable, including a mandatory redemption feature effective on October 27, 2027, and it is accounted for as a note receivable. Our investment bears interest at a rate of 15.0% for the first 27 months.
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.
During the year ended December 31, 2024, we recognized $1.5 million of interest income on the note. See Note 7 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
The spaces were available for lease as of January 1, 2024. 7 Table of Contents Tenant Diversification The following table lists the 20 largest tenants in our retail and office operating property portfolios, based on ABR as of December 31, 2023 ($ 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.
The spaces were available for lease as of January 1, 2025. 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, 2024 ($ in thousands): Tenant (1) Number of Leases Lease Expiration ABR % of Total ABR/AQR Constellation Energy Generation 1 2036 $ 15,463 7.7 % Morgan Stanley 3 2028 - 2035 8,883 4.4 % Harris Teeter/Kroger 6 2026 - 2035 3,781 1.9 % Clark Nexsen 1 2029 2,914 1.4 % Canopy by Hilton 1 2045 2,698 1.3 % Dick's Sporting Goods/Golf Galaxy 2 2028 - 2032 1,977 1.0 % Franklin Templeton 1 2038 1,898 0.9 % Huntington Ingalls Industries 2 2025 - 2029 1,774 0.9 % Duke University 1 2029 1,742 0.9 % TJ Maxx/Homegoods 5 2026 - 2030 1,554 0.8 % PetSmart 5 2027 - 2030 1,527 0.8 % Georgia Tech 1 2031 1,446 0.7 % WeWork 1 2034 1,348 0.7 % Mythics 1 2030 1,311 0.7 % Puttshack 1 2036 1,203 0.6 % Apex Entertainment 1 2035 1,176 0.6 % Pindrop 1 2027 1,172 0.6 % Kimley-Horn 1 2027 1,145 0.6 % Amazon/Whole Foods 1 2040 1,144 0.6 % Ross Dress for Less 3 2027 - 2030 1,122 0.6 % Top 20 Total $ 55,278 27.7 % ________________________________________ (1) Excludes leases from development and redevelopment properties that have been delivered but are not yet stabilized.
The preferred equity investment has economic and other terms consistent with a note receivable, including a mandatory redemption feature effective on January 16, 2028. Our investment bears interest at a rate of 15.0%, which does not compound. Upon The Allure at Edinburgh obtaining a certificate of occupancy, the investment will bear interest at a rate of 10.0%.
The preferred equity investment has economic and other terms consistent with a note receivable, including a mandatory redemption feature effective on January 16, 2028, and it is accounted for as a note receivable. Our investment bears interest at a rate of 15.0%, which does not compound.
The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.
Under the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.
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.
As of December 31, 2024, $77.2 million has been funded on this senior loan. 9 Table of Contents 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.
As of December 31, 2023, this note was fully funded. See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
As of December 31, 2024, this note was fully funded and the development property was approximately 69% leased. See Note 7 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.
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.
Current estimated project costs are $239.3 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.
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.
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. They will occupy at least 553,000 square feet of office space.
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 believe that our longstanding presence in our target 2 Table of Contents 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 provide 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.
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.
In addition to the ownership of our operating property portfolio, we historically have developed and built properties for our own account and through joint ventures between us and unaffiliated partners and invested in development projects through real estate financing arrangements.
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.
Our Properties The table below sets forth certain information regarding our stabilized portfolio as of December 31, 2024. 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.
On November 1, 2026, the investment will again bear interest at a rate of 15.0% through maturity. The interest compounds annually. We also earn an unused commitment fee of 10.0% on the unfunded portion of the investment's maximum loan commitment, which also compounds annually, and an equity fee on our commitment of $0.4 million to be amortized through redemption.
Beginning on July 10, 2026, the investment will bear interest at a rate of 9.0% for 12 months. On July 10, 2027, the investment will again bear interest at 12.0% through maturity. The interest compounds annually. We also earn an unused commitment fee of 4.5% on the unfunded portion of the investment's maximum loan commitment, which also compounds annually.
On October 3, 2025, the investment will again bear interest at a rate of 14% through maturity. Additionally, the amendment introduced an unused commitment fee of 10% on the unfunded portion of the investment's maximum loan commitment, which is effective January 1, 2023. Both the interest and unused commitment fee compound annually.
Additionally, effective January 1, 2023, the investment earns an unused commitment fee of 10.0% on the unfunded portion of the investment's maximum loan commitment and an equity fee on our commitment of $0.3 million, which is amortized through the date of redemption. Both the interest and unused commitment fee compound annually.
Development, Not Delivered ($ 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.
Development, Not Delivered Schedule (1) Estimated Initial Stabilized AHH Property Type Property Location Size (1) Start Occupancy Operation (2) Ownership % Southern Post Retail Roswell, GA 42,000 sf retail 4Q21 3Q24 1Q26 100% Retail* Southern Post Office Roswell, GA 95,000 sf office 4Q21 2Q24 1Q26 100% Office* Chandler Residences Roswell, GA 137 multifamily units 4Q21 2Q24 2Q25 100% Multifamily* Redevelopment AHH Property Type Property Location Ownership % Columbus Village II Virginia Beach, VA 100% Retail* ________________________________________ 8 Table of Contents * Mixed-use asset or located in a mixed-use development.
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 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% through the first 24 months of the investment.
The balance on The Allure at Edinburgh note was $9.8 million as of December 31, 2023, which includes $0.6 million of cumulative accrued interest. During the year ended December 31, 2023, we recognized $0.6 million of interest income on the note. As of December 31, 2023, this note was fully funded.
The balance on the Solis North Creek note was $5.8 million as of December 31, 2024, which includes $0.2 million of cumulative accrued interest and $0.5 million of cumulative accrued unused commitment fees. During the year ended December 31, 2024, we recognized $0.7 million of interest income on the note.
Americans With Disabilities Act Our properties must comply with Title III of the Americans with Disabilities Act of 1990 (the "ADA"), to the extent that such properties are "public accommodations" as defined by the ADA. Under the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons.
We believe that each of the properties in our portfolio has the necessary permits and approvals to operate its business. Americans With Disabilities Act Our properties must comply with Title III of the Americans with Disabilities Act of 1990 (the "ADA"), to the extent that such properties are "public accommodations" as defined by the ADA.
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.
We provided a completion guarantee to the lender for this project. The construction loan is cross-collateralized with Harbor Point Parcel 4.
(2) Estimated first full quarter of stabilized operations. Estimates are inherently uncertain, and we can provide no assurance that our assumptions regarding the timing of stabilization will prove accurate. Our execution on all of the projects identified in the preceding tables are subject to, among other factors, regulatory approvals, financing availability, and suitable market conditions.
Our execution on all of the projects identified in the preceding tables are subject to, among other factors, regulatory approvals, financing availability, and suitable market conditions.
In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged. Furthermore, we may not be able to obtain adequate insurance coverage at reasonable costs in the future as the costs associated with property and casualty renewals may be higher than anticipated.
Furthermore, we may not be able to obtain adequate insurance coverage at reasonable costs in the future as the costs associated with property and casualty renewals may be higher than anticipated. Regulation General Our properties are subject to various covenants, laws, ordinances, and regulations, including regulations relating to common areas and fire and safety requirements.
(4) We lease all or a portion of the land underlying this property pursuant to a ground lease.
(4) Formerly known as Apex Entertainment. (5) We lease all or a portion of the land underlying this property pursuant to a ground lease. (6) We are entitled to a preferred return on our investment in this property.
On March 29, 2023, the Solis Gainesville II preferred equity investment was modified to adjust the interest rate. The interest rate of 14% remains effective through the first 24 months of the investment. Beginning on October 3, 2024, the investment will bear interest at a rate of 10% for 12 months.
Beginning on October 3, 2024, the investment will bear interest at a rate of 10.0% for 12 months. On October 3, 2025, the investment will again bear interest at a rate of 14.0% through maturity.
The common equity partner in the development property holds an option to sell the property to us at a predetermined amount if certain conditions are met. We also hold an option to purchase the property at any time prior to maturity of the preferred equity investment, and at the same predetermined amount as the common equity partner's option to sell.
Upon The Allure at Edinburgh obtaining a certificate of occupancy, the investment will bear interest at a rate of 10.0%. The common equity partner in the development property holds an option to sell the property to us at a predetermined amount if certain conditions are met.
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.
As of December 31, 2024, we owned, through a combination of direct and indirect interests, 78.6% of the common units of limited partnership interest in our Operating Partnership ("OP Units"). 2024 and Recent Highlights The following highlights our results of operations and significant transactions for the year ended December 31, 2024: • Net income attributable to common stockholders and holders of OP Units ("OP Unitholders") of $30.9 million, or $0.33 per diluted share, for the year ended December 31, 2024. • Funds from operations attributable to common stockholders and OP Unitholders ("FFO") of $99.8 million, or $1.08 per diluted share, for the year ended December 31, 2024.
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.
We are a vertically-integrated, self-managed REIT with over four decades of experience managing high-quality properties located primarily in the Mid-Atlantic and Southeastern United States. Our focus is to deliver long-term, sustainable shareholder value by consistently investing in and operating the highest-quality assets, maintaining a robust and resilient balance sheet, and fostering a dynamic, highly skilled team.
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.
Our portfolio is distinguished by its high quality, featuring exceptional amenities, and is strategically located in high barrier-to-entry markets that we believe will provide long-term value. • 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.
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.
Plans for this development may evolve as the development process proceeds. Project costs at this time are subject to change and currently estimated at $277.9 million. We have a current projected equity commitment of $52.9 million relating to this project, of which we had funded $46.4 million as of December 31, 2024.
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.
Rowe Price Global HQ | (Harbor Point Parcel 3) Baltimore, MD 553,000 sf office / 20,200 sf retail / 250 parking spaces $ 277,900 $ 52,900 $ 46,400 2Q22 1Q25 1Q25 50% Office* Allied | (Harbor Point Parcel 4) Baltimore, MD 312 units / 15,800 sf retail / 1,252 parking spaces 239,300 115,900 115,900 2Q22 1Q25 3Q26 90% (3) Multifamily* Total $ 517,200 $ 168,800 $ 162,300 ________________________________________ * Mixed-use asset or located in a mixed-use development.
(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.
(7) As of December 31, 2024, we occupied 54,621 square feet at these two properties at an ABR of $1.7 million, or $30.37 per leased square foot, which amounts are reflected in this table. The rent paid by us is eliminated in the consolidated financial statements in accordance with U.S. generally accepted accounting principles ("GAAP").
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.
(8) For the properties in our multifamily portfolio, annualized quarterly rent ("AQR") is calculated by multiplying (a) revenue for the quarter ended December 31, 2024 by (b) four. Lease Expirations The following tables summarize the scheduled expirations of leases in our retail and office operating property portfolios as of December 31, 2024.
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.
The proceeds were used to pay off the $21.1 million loan secured by the Nexton Square property and pay down our revolving credit facility. For definitions and discussion of FFO, Normalized FFO, NOI, and Same Store NOI, see the section below entitled "Item 7.
Removed
Our construction and development experience includes mid- and high-rise office buildings, retail strip malls, retail power centers, multifamily apartment communities, hotels and conference centers, single- and multi-tenant industrial, distribution, and manufacturing facilities, educational, medical and special purpose facilities, government projects, parking garages, and mixed-use town centers.
Added
See "Non-GAAP Financial Measures." • Normalized funds from operations attributable to common stockholders and OP Unitholders ("Normalized FFO") of $118.9 million, or $1.29 per diluted share, for the year ended December 31, 2024. See "Non-GAAP Financial Measures." • As of December 31, 2024, weighted average stabilized portfolio occupancy was 96.0%.
Removed
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.
Added
Retail occupancy was 95.3%, office occupancy was 97.2%, and multifamily occupancy was 95.3%. • Positive spreads on renewals across all segments: ▪ Retail 11.1% (GAAP) and 2.9% (Cash) ▪ Office 18.7% (GAAP) and 3.5% (Cash) ▪ Multifamily 4.7% (GAAP and Cash) • Executed 93 lease renewals and 44 new leases during the year ended December 31, 2024 for an aggregate of 952,019 of net rentable square feet. • Same Store net operating income ("NOI") for the year ended December 31, 2024 increased 1.9% on a GAAP basis compared to the year ended December 31, 2023. • Property segment NOI of $171.0 million for the year ended December 31, 2024, which represents a 6.8% increase compared to $160.1 million for the year ended December 31, 2023. • Third-party construction backlog as of December 31, 2024 was $123.8 million and general contracting and real estate services gross profit for the year ended December 31, 2024 was $13.9 million. • Dividends declared during the year ended December 31, 2024 of $0.82 per share, representing a 5.8% year-over-year increase. 1 Table of Contents • During the fourth quarter of 2024, unrealized gains on non-designated interest rate derivatives that positively affected FFO were $2.5 million.
Removed
We also are proud to have completed numerous signature properties across the Mid-Atlantic region, such as the Constellation Energy Building in Baltimore, Maryland, the Inner Harbor East development in Baltimore, Maryland and the Mandarin Oriental Hotel in Washington, D.C.
Added
As of December 31, 2024, the asset value of our entire interest rate derivative portfolio, net of unrealized gains, was $15.9 million.
Removed
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.
Added
These unrealized gains are excluded from normalized FFO. • In July, we realized $25.8 million in cash upon full redemption of the Solis City Park II preferred equity investment. • In September, we raised $108.7 million of gross proceeds in an underwritten public offering of 10.35 million shares of our common stock at a public offering price of $10.50 per share.
Removed
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.
Added
Net proceeds, after deducting the underwriting discount and offering expenses, totaled $103.5 million. • On September 27, 2024, we paid off the $35.0 million, $23.7 million, and $10.9 million balances of the loans secured by the Chronicle Mill mixed-use multifamily, retail, and office property, the Premier mixed-use multifamily and retail property, and the Market at Mill Creek retail property, respectively. • We delivered Southern Post Retail, Southern Post Office, and Chandler Residences, a mixed-use development comprised of 42,000 square feet of retail space, 95,000 square feet of office space, and 137 multifamily units. • Consistent with our previously announced succession plan, on November 14, 2024, Louis S.
Removed
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.
Added
Haddad informed our board of directors of his decision to retire from his position as Chief Executive Officer of the Company (“Chief Executive Officer”), effective December 31, 2024. Mr. Haddad remains a director and the Executive Chairman of our board through the Company’s 2025 annual meeting of stockholders, at which Mr.
Removed
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.
Added
Haddad is expected to be nominated for reelection to the board. • Pursuant to the previously announced succession plan, the board appointed Shawn J. Tibbetts, the Company’s President and Chief Operating Officer, to the position of Chief Executive Officer and President effective January 1, 2025. The board appointed Mr.
Removed
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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese 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.
Biggest changeThese 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.
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 may be unable to identify and complete acquisitions of properties and development opportunities 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.
Our ability to complete development projects or acquire properties on favorable terms, or at all, may be exposed to the following significant risks: • we may incur significant costs and divert management attention in connection with evaluating and negotiating potential development opportunities and acquisitions, including those that we are subsequently unable to complete; • we have agreements for the development or acquisition of properties that are subject to conditions, which we may be unable to satisfy; and • we may be unable to obtain financing on favorable terms or at all.
Our ability to complete development projects or acquire properties on favorable terms, or at all, may be exposed to the following significant risks: • we may incur significant costs and divert management attention in connection with evaluating and negotiating potential acquisitions and development opportunities, including those that we are subsequently unable to complete; • we have agreements for the acquisition or development of properties that are subject to conditions, which we may be unable to satisfy; and • we may be unable to obtain financing on favorable terms or at all.
The failure of properties that we develop or acquire to meet our financial expectations could have a material adverse effect on us, including our financial condition, results of operations, cash flow, cash available for distribution, ability to service our debt obligations, the per share trading price of our common stock and Series A Preferred Stock, and growth prospects.
The failure of properties that we acquire or develop to meet our financial expectations could have a material adverse effect on us, including our financial condition, results of operations, cash flow, cash available for distribution, ability to service our debt obligations, the per share trading price of our common stock and Series A Preferred Stock, and growth prospects.
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.
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 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.
Certain provisions of the Maryland General Corporation Law (the "MGCL") may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including: • "business combination" provisions that, subject to limitations, prohibit certain business combinations between us and an "interested stockholder" (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting shares or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding stock at any time within the two-year period immediately prior to the date in question) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose certain fair price and supermajority stockholder voting requirements on these combinations; and • "control share" provisions that provide that holders of "control shares" of our company (defined as shares of stock that, when aggregated with other shares of stock controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding "control shares") have no voting rights with respect to their control shares, except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
Certain provisions of the Maryland General Corporation Law (the "MGCL") may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including: • "business combination" provisions that, subject to limitations, prohibit certain business combinations between us and an "interested stockholder" (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting shares or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding stock at any time within the two-year period immediately prior to the date in question) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose certain fair price and supermajority stockholder voting requirements on these combinations; and • "control share" provisions that provide that holders of "control shares" of our company (defined as shares of stock that, when aggregated with other shares of stock controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding "control shares") have no voting rights with respect to their control shares, except to the extent approved by our 33 Table of Contents stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following: • our cash flow may be insufficient to meet our required principal and interest payments; • we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs; • we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness, particularly if interest rates remain elevated; • we may be forced to dispose of one or more of our properties, possibly on unfavorable terms or in violation of certain covenants to which we may be subject; • we may default on our obligations, in which case the lenders or mortgagees may have the right to foreclose on any properties that secure the loans or collect rents and other income from our properties; • we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations or reduce our ability to pay, or prohibit us from paying, distributions to our stockholders; and • our default under any loan with cross-default provisions could result in a default on other indebtedness.
Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following: • our cash flow may be insufficient to meet our required principal and interest payments; • we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs; • we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness, particularly if interest rates remain elevated; 17 Table of Contents • we may be forced to dispose of one or more of our properties, possibly on unfavorable terms or in violation of certain covenants to which we may be subject; • we may default on our obligations, in which case the lenders or mortgagees may have the right to foreclose on any properties that secure the loans or collect rents and other income from our properties; • we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations or reduce our ability to pay, or prohibit us from paying, distributions to our stockholders; and • our default under any loan with cross-default provisions could result in a default on other indebtedness.
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.
Our ability to make distributions may also be limited by our credit facility. Under the terms of the credit facility, we may not pay cash dividends if a default has occurred and is continuing or would result therefrom.
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.
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.
Voting rights for holders of our Series A Preferred Stock exist primarily with respect to the ability to elect, together with holders of our capital stock ranking on parity with our Series A Preferred Stock and having similar voting rights, two additional directors to our board of directors in the event that six quarterly dividends (whether or not consecutive) payable on our Series A Preferred Stock are in arrears, and with respect to voting on amendments to our charter or articles supplementary relating to our Series A Preferred Stock that materially and adversely affect the rights of the holders of our Series A Preferred Stock or create additional classes or series of our capital stock expressly designated as ranking senior to our Series A Preferred Stock as to distribution rights and rights upon our liquidation, dissolution, or winding up.
Voting rights for holders of our Series A Preferred Stock exist primarily with respect to the ability to elect, together with holders of our capital stock ranking on parity with our Series A Preferred Stock and having similar voting rights, two additional directors to our board of directors in the event that six quarterly dividends (whether or not consecutive) payable on our Series A Preferred Stock are in arrears, and with respect to voting on amendments to our charter or articles supplementary relating to our Series A Preferred Stock that materially and adversely affect the rights of the holders of our Series A Preferred Stock or create additional classes or series of 40 Table of Contents our capital stock expressly designated as ranking senior to our Series A Preferred Stock as to distribution rights and rights upon our liquidation, dissolution, or winding up.
In order to qualify as a REIT for each taxable year after 2013, five or fewer individuals, as defined in the Code, may not own, beneficially or constructively, more than 50% in value of our issued and outstanding stock at any time during the last half of a taxable year.
In order to qualify as a REIT for each taxable year, five or fewer individuals, as defined in the Code, may not own, beneficially or constructively, more than 50% in value of our issued and outstanding stock at any time during the last half of a taxable year.
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.
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.
To maintain our REIT status, we may be forced to borrow funds during unfavorable market conditions, and the unavailability of such capital on favorable terms at the desired times, or at all, 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.
To maintain our REIT status, we may be forced to borrow funds during unfavorable market conditions, and the unavailability of such capital on favorable terms at the desired times, or at all, 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 37 Table of Contents financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
The loss of services of one or more members of our senior management team, or our inability to attract and retain highly qualified personnel, could adversely affect our business, diminish our investment opportunities, and weaken our relationships with lenders, business partners, existing and prospective tenants, and industry participants, which could materially and adversely affect our financial condition, results of operations, cash flow, and the per share trading price of our common stock and Series A Preferred Stock.
The loss of services of one or more members of our senior management team, or our inability to attract and retain highly qualified personnel, could adversely affect our business, diminish our investment opportunities, and weaken our relationships with lenders, business partners, existing and prospective tenants, and industry participants, which could materially 24 Table of Contents and adversely affect our financial condition, results of operations, cash flow, and the per share trading price of our common stock and Series A Preferred 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 2024 compared to 2023.
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 2025 compared to 2024.
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.
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 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.
To the extent that these events occur, the total costs of the project could exceed our estimates and our contracted cost and we could experience reduced profits or, in some cases, incur a loss on a project, 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.
To the extent that these events occur, the total costs of the project could exceed our estimates and our contracted cost and we could experience reduced profits or, in some cases, incur a loss on a project, which may materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and 31 Table of Contents ability to service our debt obligations.
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.
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.
Cybersecurity incidents, including physical or electronic break-ins, computer viruses, malware, attacks by hackers, ransomware attacks, phishing attacks, supply chain attacks, breaches due to employee error or misconduct and other similar breaches can create system disruptions, shutdowns or unauthorized access to information maintained in our information technology systems and in the information technology systems of our third-party service providers.
Cybersecurity incidents, including physical or electronic break-ins, computer viruses, malware, attacks by hackers, ransomware attacks, phishing attacks, supply chain attacks, breaches due to employee error or misconduct and other 23 Table of Contents similar breaches can create system disruptions, shutdowns or unauthorized access to information maintained in our information technology systems and in the information technology systems of our third-party service providers.
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.
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.
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.
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.
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.
We have originated, and in the future expect to originate or acquire, mezzanine loans, preferred equity investments, or 20 Table of Contents 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.
Local regulations, including municipal or local ordinances, zoning restrictions, and restrictive covenants imposed by community developers may restrict our use of our properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our properties, including prior to developing or acquiring a property or when undertaking renovations of any of our existing properties.
Local regulations, including municipal or local ordinances, zoning restrictions, and 29 Table of Contents restrictive covenants imposed by community developers may restrict our use of our properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our properties, including prior to developing or acquiring a property or when undertaking renovations of any of our existing properties.
Competitive housing in a particular area and an increase in affordability of owner-occupied single-family and multifamily units due to, among other things, declining housing prices, oversupply, mortgage interest rates, and tax incentives and government programs to promote home ownership, could adversely affect our ability to retain residents, lease apartment units, and increase or maintain rents at our multifamily properties, which could adversely impact our results of operations, cash flow, and cash available for distribution.
Competitive housing in a particular area and an increase in affordability of owner-occupied single-family and 19 Table of Contents multifamily units due to, among other things, declining housing prices, oversupply, mortgage interest rates, and tax incentives and government programs to promote home ownership, could adversely affect our ability to retain residents, lease apartment units, and increase or maintain rents at our multifamily properties, which could adversely affect our results of operations, cash flow, and cash available for distribution.
Our Operating Partnership will not indemnify or advance funds to any person with respect to any action initiated by the person seeking indemnification without our approval (except for any proceeding brought to enforce such person’s right to indemnification under the partnership agreement) or if the person is found to be liable to our Operating Partnership on any portion of any claim in the action.
Our 32 Table of Contents Operating Partnership will not indemnify or advance funds to any person with respect to any action initiated by the person seeking indemnification without our approval (except for any proceeding brought to enforce such person’s right to indemnification under the partnership agreement) or if the person is found to be liable to our Operating Partnership on any portion of any claim in the action.
We have entered into indemnification agreements with each of our executive officers and directors whereby we agreed to indemnify our directors and executive officers to the fullest extent permitted by Maryland law against all expenses and liabilities incurred in their capacity as an officer or director, subject to limited exceptions.
We have entered into indemnification agreements with each of our executive officers and directors whereby we agreed to indemnify our directors and executive officers to the fullest extent permitted by Maryland law against all 34 Table of Contents expenses and liabilities incurred in their capacity as an officer or director, subject to limited exceptions.
If we incur material environmental liabilities in the future, we may face significant remediation costs, and we may find it difficult to sell any affected properties. We are subject to risks from natural disasters, such as hurricanes and flooding, and the risks associated with the physical effects of climate change.
If we incur material environmental liabilities in the future, we may face significant remediation costs, and we may find it difficult to sell any affected properties. 28 Table of Contents We are subject to risks from natural disasters, such as hurricanes and flooding, and the risks associated with the physical effects of climate change.
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.
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.
In addition, our TRS will be subject to regular corporate federal, state, and local taxes. Any of these taxes would decrease cash available for distribution to our stockholders. Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
In addition, our TRS will be subject to regular corporate federal, state, and local taxes. Any of these taxes would decrease cash available for distribution to our stockholders. 35 Table of Contents Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
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.
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; 38 Table of Contents • 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, including the change from the Biden administration to the Trump administration and policy changes resulting therefrom; • 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.
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.
See “—The prohibited transactions tax may limit our ability to dispose of our properties.” 27 Table of Contents 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.
These devices are used to transmit sensitive and 23 Table of Contents confidential information including financial and strategic information about us, employees, business partners, tenants, and other individuals and organizations. Additionally, we utilize third-party service providers that host personally identifiable information and other confidential information of our employees, business partners, tenants, and others.
These devices are used to transmit sensitive and confidential information including financial and strategic information about us, employees, business partners, tenants, and other individuals and organizations. Additionally, we utilize third-party service providers that host personally identifiable information and other confidential information of our employees, business partners, tenants, and others.
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.
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.
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.
As of December 31, 2024, we had approximately $121.4 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.
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.
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.
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.
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.
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.
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.
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.
The limited partners in our Operating Partnership (other than us) owned approximately 21.4% of the outstanding OP Units of our Operating Partnership as of December 31, 2024. Our rights and the rights of our stockholders to take action against our directors and officers are limited.
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.
As of December 31, 2024, we owned 78.6% 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.
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.
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.
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.
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.
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.
For example, all but one of the properties in our portfolio as of December 31, 2024 are located in Maryland, Virginia, North Carolina, South Carolina, Georgia, and Florida, which are areas particularly susceptible to hurricanes.
Notwithstanding that we generally may not redeem our Series A Preferred Stock prior to June 18, 2024, we have a special optional redemption right to redeem our Series A Preferred Stock in the event of a change of control, and holders of our Series A Preferred Stock will not have the right to convert any shares of our Series A Preferred Stock that we have elected to redeem prior to the change of control conversion date.
We have a special optional redemption right to redeem our Series A Preferred Stock in the event of a change of control, and holders of our Series A Preferred Stock will not have the right to convert any shares of our Series A Preferred Stock that we have elected to redeem prior to the change of control conversion date.
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.
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 39.0% of our NOI for the year ended December 31, 2024 was from retail properties.
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, 2024, approximately 4.0% of the square footage of the stabilized properties in our retail and office portfolios was available.
Item 1B. Unresolved Staff Comments. None. 40 Table of Contents
Item 1B. Unresolved Staff Comments. None. 41 Table of Contents
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.
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. 26 Table of Contents These risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent completion of development or redevelopment activities once undertaken, any of which could have a material adverse effect on our financial condition, results of operations, and cash flow.
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, our credit facility, M&T term loan facility, and TD term loan 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.
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.
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 any of the foregoing were to occur, it 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.
If any of the foregoing were to occur, it 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. Failure to succeed in new markets may limit our growth.
Failure to succeed in new markets may limit our growth. We have acquired in the past, and we may acquire in the future if appropriate opportunities arise, properties that are outside of our primary markets.
We have acquired in the past, and we may acquire in the future if appropriate opportunities arise, properties that are outside of our primary markets.
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.
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.
Expectations of our company relating to environmental, social and governance factors may impose additional costs and expose us to new risks. 25 Table of Contents There is an increasing focus from certain investors, tenants, employees, and other stakeholders concerning corporate responsibility, specifically related to environmental, social and governance factors.
Expectations of our company relating to environmental, social and governance factors may impose additional costs and expose us to new risks. Certain investors, tenants, employees, and other stakeholders focus on corporate responsibility, specifically related to environmental, social and governance factors.
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.
Our credit facility, M&T term loan facility (as defined below), and TD term loan facility (as defined below) restrict our ability to engage in certain business activities, including our ability to incur additional indebtedness, make capital expenditures, and make certain investments. 22 Table of Contents Our credit facility, M&T term loan facility, and TD term loan facility contain 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.
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. 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.
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.
If we are unable to identify attractive investment opportunities and successfully develop new properties, our results of operations, cash flow, and growth prospects could be materially and adversely affected.
If we are unable to identify attractive investment opportunities and successfully develop new properties, our results of operations, cash flow, and growth prospects could be materially and adversely affected. We may dispose of certain properties over time as we seek to pursue growth through our investment strategy.
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.
Additionally, 4.7% and 12.3% of the ABR in our retail portfolio was scheduled to expire in 2025 and 2026, respectively, and 3.6% and 2.0% of the ABR in our office portfolio was scheduled to expire in 2025 and 2026, respectively.
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).
As of December 31, 2024, Daniel Hoffler, our Chairman Emeritus, owned approximately 5.2% and, collectively, Messrs. Hoffler, Haddad, and Kirk owned approximately 9.6% of the combined outstanding shares of our common stock and OP Units (which OP Units may be redeemable for shares of our common stock).
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.
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.
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.
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 2024, the consumer price index rose by approximately 3% over the previous year, following 2023's increase in the index of 3%.
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.
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.
Our ability to complete the projects in our construction pipeline on time and on budget could be materially and adversely affected as a result of the following factors, among others: • shortages of subcontractors, equipment, materials, or skilled labor; • unscheduled delays in the delivery of ordered materials and equipment; • unanticipated increases in the cost of equipment, labor, and raw materials; • unforeseen engineering, environmental, or geological problems; • weather interferences; • difficulties in obtaining necessary permits or in meeting permit conditions; • client acceptance delays; or • work stoppages and other labor disputes.
Our ability to complete the projects in our construction pipeline on time and on budget could be materially and adversely affected as a result of the following factors, among others: • shortages of subcontractors, equipment, materials, or skilled labor; • unscheduled delays in the delivery of ordered materials and equipment; • unanticipated increases in the cost of equipment, labor, and raw materials, due to, among other things, trade tensions, disruptions, or new and significant tariffs; • unforeseen engineering, environmental, or geological problems; • weather interferences; • difficulties in obtaining necessary permits or in meeting permit conditions; • client acceptance delays; or • work stoppages and other labor disputes. 30 Table of Contents If we do not complete construction projects on time and on budget, it could have a material adverse effect on us, including our results of operations, cash flow, and growth prospects.
In accordance with GAAP, we record revenue as work on the contract progresses. The cumulative amount of revenues recorded on a contract at a specified point in time is that percen tage of total estimated revenues that costs incurred to date bear to estimated total costs.
The cumulative amount of revenues recorded on a contract at a specified point in time is that percen tage of total estimated revenues that costs incurred to date bear to estimated total costs. Accordingly, contract revenues and total cost estimates are reviewed and revised as the work progresses.
In addition, there is an increased focus on such matters by various regulatory authorities, including the SEC, and the activities and expense required to comply with new regulations or standards may be significant.
V arious regulatory authorities, including the SEC, also focus on such matters, and the activities and expense required to comply with new regulations or standards may be significant.
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.
Furthermore, many of our properties are located in the Town Center of Virginia Beach and Harbor Point at Baltimore, and the rental revenues from such properties represented 22% and 27%, respectively, of our total rental revenues for the year ended December 31, 2024.
This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have a material and adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, ability to service our debt obligations, and the per share trading price of our common stock and Series A Preferred Stock. 38 Table of Contents Increases in market interest rates may have an adverse effect on the trading prices of our common stock and Series A Preferred Stock as prospective purchasers of our common stock and Series A Preferred Stock may expect a higher dividend yield and as an increased cost of borrowing may decrease our funds available for distribution.
This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have a material and adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, ability to service our debt obligations, and the per share trading price of our common stock and Series A Preferred Stock.
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.
Ground lease costs are contractual, but in some cases, lease payments reset every few years based on changes on consumer price indices. 21 Table of Contents 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.
Subject to maintaining our qualification as a REIT, we expect to continue to enter into hedging transactions to protect us from the effects of interest rate fluctuations on floating rate debt.
Subject to maintaining our qualification as a REIT, we expect to continue to enter into hedging transactions to protect us from the effects of interest rate fluctuations on floating rate debt. Our existing hedging transactions have included, and future hedging transactions may include, entering into interest rate cap agreements or interest rate swap agreements, which involve risk.
Operating expenses include those for property-related contracted services such as janitorial and engineering services, utilities, repairs and maintenance, and insurance. Property taxes are also impacted by inflationary changes as taxes are regularly reassessed based on changes in the fair value of our properties. We also have ground lease expenses in certain of our properties.
Property taxes are also impacted by inflationary changes as taxes are regularly reassessed based on changes in the fair value of our properties. We also have ground lease expenses in certain of our properties.
For example, they do not generally include soil sampling, subsurface investigations or hazardous materials surveys. Furthermore, we do not have current Phase I Environmental Site Assessment reports for all of the properties in our portfolio and, as such, may not be aware of all potential or existing environmental contamination liabilities at the properties in our portfolio.
Furthermore, we do not have current Phase I Environmental Site Assessment reports for all of the properties in our portfolio and, as such, may not be aware of all potential or existing environmental contamination liabilities at the properties in our portfolio. As a result, we could potentially incur material liability for these issues.
If we cannot obtain capital from third-party sources, we may not be able to acquire or develop properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.
Our access to third-party sources of capital depends, in part, on: • general market conditions; • the market’s perception of our growth potential; • our current debt levels; • our current and expected future earnings; • our cash flow and cash distributions; and • the market price per share of our common stock and Series A Preferred Stock. 18 Table of Contents If we cannot obtain capital from third-party sources, we may not be able to acquire or develop properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.
If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on the total return to our stockholders.
If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on the total return to our stockholders. 36 Table of Contents Our ownership of our TRS will be subject to limitations and our transactions with our TRS will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.
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.
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.
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.
As of December 31, 2024, our properties in the Virginia, Maryland. and North Carolina markets represented approximately 41%, 28%, and 13%, respectively, of the total rental revenues of the properties in our portfolio.
We cannot predict whether, when, or to what extent any new U.S. federal tax laws, regulations, interpretations, or rulings will impact the real estate investment industry or REITs. Prospective investors are urged to consult their tax advisors regarding the effect of potential future changes to the federal tax laws on an investment in our shares.
We cannot predict whether, when, or to what extent any new U.S. federal tax laws, regulations, interpretations, or rulings will impact the real estate investment industry or REITs, including whether various favorable U.S. federal tax laws will be extended.
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.
Foreclosures could also trigger our tax indemnification obligations under the terms of our tax protection agreements with respect to the sales of certain properties.
Variations of actual results from assumptions on an unusually large project or on a number of average size projects could be material. We are also required to immediately recognize the full amount of the estimated loss on a contract when estimates indicate such a loss.
Adjustments are reflected in contract revenues in the period when such estimates are revised. Estimates are based on management’s reasonable assumptions and experience, but are only estimates. Variations of actual results from assumptions on an unusually large project or on a number of average size projects could be material.
As of December 31, 2023, we had total debt of approximately $1.4 billion, including amounts drawn under our amended credit facility, a substantial portion of which is guaranteed by our Operating Partnership, and we may incur significant additional debt to finance future acquisition and development activities.
As of December 31, 2024, we had total debt of approximately $1.3 billion, including amounts drawn under our credit facility, and we may incur significant additional debt to finance future acquisition and development activities. Excluding unamortized fair value adjustments and debt issuance costs, the aggregate outstanding principal balance of our debt was $1.3 billion as of December 31, 2024.
Because stockholders do not directly own OP Units, you do not have any voting rights with respect to any such issuances or other partnership level activities of our Operating Partnership. 34 Table of Contents Risks Related to Our Status as a REIT Failure to maintain our qualification as a REIT would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distribution to our stockholders.
Because stockholders do not directly own OP Units, you do not have any voting rights with respect to any such issuances or other partnership level activities of our Operating Partnership.
Such adjustments and accrued losses could result in reduced profitability, which could negatively impact our cash flow from operations.
We are also required to immediately recognize the full amount of the estimated loss on a contract when estimates indicate such a loss. Such adjustments and accrued losses could result in reduced profitability, which could negatively impact our cash flow from operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+0 added−0 removed22 unchanged
Biggest changeOur Director of IT holds an undergraduate degree in information technology and has attained the following professional certifications: CompTIA Network+, CompTIA Security+, Microsoft Certified Professional, Cisco Certified Network Associate, and Department of Defense Information Assurance Technical, Level II.
Biggest changeOur Senior Director of IT holds an undergraduate degree in information technology and has attained the following professional certifications: CompTIA Network+, CompTIA Security+, and Microsoft Certified Professional.
Our escalation policy details specific escalation processes by which senior leadership (Director of IT, Chief Financial Officer, and Chief Executive Officer) are informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents. iii.
Our escalation policy details specific escalation processes by which senior leadership (Senior Director of IT, Chief Financial Officer, and Chief Executive Officer) are informed about and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents. iii.
Further, our Director of Corporate Business Systems holds a Bachelor of Science degree in Construction Science and Management and has over 8 years of experience with software implementations, technology innovation, and corporate business systems. ii. Monitoring The management team ensures the implementation of robust monitoring protocols for preventing, detecting, mitigating, and remediating cybersecurity threats.
Further, our Director of Corporate Business Systems holds a Bachelor of Science degree in Construction Science and Management and has over 9 years of experience with software implementations, technology innovation, and corporate business systems. ii. Monitoring The management team ensures the implementation of robust monitoring protocols for preventing, detecting, mitigating, and remediating cybersecurity threats.
Our Chief Financial Officer holds an undergraduate and graduate degree in economics and has over 14 years of experience with managing risks at the Company and in environments similar to the Company’s, including risks arising from cybersecurity threats. Additionally, our Director of IT has served in various roles in information technology and information security for over 23 years.
Our Chief Financial Officer holds an undergraduate and graduate degree in economics and has over 15 years of experience with managing risks at the Company and in environments similar to the Company’s, including risks arising from cybersecurity threats. Additionally, our Senior Director of IT has served in various roles in information technology and information security for over 24 years.
Our audit committee and board of directors regularly receive updates (including, in the case of our audit committee, quarterly updates) from our Chief Financial Officer and other members of management regarding the status of 41 Table of Contents cybersecurity initiatives and the effectiveness of our internal control system related to information security.
Our audit committee and board of directors regularly receive updates (including, in the case of our audit committee, quarterly updates) from our Chief Financial Officer, Senior Director of Information Technology, and other 42 Table of Contents members of management regarding the status of cybersecurity initiatives and the effectiveness of our internal control system related to information security.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
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
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. 43 Table of Contents Item 4. Mine Safety Disclosures. Not Applicable. 44 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+1 added−6 removed4 unchanged
Biggest changeOur OP Units are redeemable for cash or, at our election, for shares of our common stock.
Biggest changeOur 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 On June 15, 2023, we adopted a $50.0 million share repurchase program (the "Share Repurchase Program").
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.
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.
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.
Under the Share Repurchase Program, we may repurchase shares of our 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.
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.
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 by us and does not have an expiration date.
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).
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, 2019 through December 31, 2024, 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, 2018. Historical total stockholder return is not necessarily indicative of future results.
The stock performance graph assumes that $100 was invested on December 31, 2019. Historical total stockholder return is not necessarily indicative of future results.
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.
Declared cash dividends were $0.82 per share for the year ended December 31, 2024. 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 23, 2024, there were approximately 118 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 21, 2025, there were approximately 116 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 23, 2024, there were 102 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 21, 2025, there were 107 holders (other than our company) of our OP Units.
The 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.
The 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. 45 Table of Contents Period Ending Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Armada Hoffler Properties, Inc. 100.00 64.08 91.08 73.02 84.00 74.96 MSCI US REIT 100.00 92.43 132.23 99.82 113.54 123.47 Russell 2000 100.00 119.96 137.74 109.59 128.14 142.93 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.
Removed
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, 2024, we did not repurchase any common stock or Series A Preferred Stock under the Share Repurchase Program. As of December 31, 2024, $37.4 million remained available for repurchases under the Share Repurchase Program. 46 Table of Contents Item 6. [Reserved]. Not applicable.
Removed
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").
Removed
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.
Removed
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.
Removed
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.
Removed
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

94 edited+39 added−42 removed76 unchanged
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 .
Biggest changeConsolidated Results of Operations The following table summarizes our results of operations for the years ended December 31, 2024, 2023, and 2022 (in thousands): Years Ended December 31, 2024 2023 2024 2023 2022 Change Change Revenues Rental revenues $ 256,697 $ 238,924 $ 219,294 $ 17,773 $ 19,630 General contracting and real estate services revenues 433,177 413,131 234,859 20,046 178,272 Interest income 18,596 15,103 16,978 3,493 (1,875) Total revenues 708,470 667,158 471,131 41,312 196,027 Expenses Rental expenses 62,410 56,419 50,742 5,991 5,677 Real estate taxes 23,308 22,442 22,057 866 385 General contracting and real estate services expenses 419,302 399,713 227,158 19,589 172,555 Depreciation and amortization 90,962 97,427 74,084 (6,465) 23,343 General and administrative expenses 20,225 18,122 15,691 2,103 2,431 Acquisition, development, and other pursuit costs 5,531 84 37 5,447 47 Impairment charges 1,494 102 416 1,392 (314) Total expenses 623,232 594,309 390,185 28,923 204,124 Gain on real estate dispositions, net 21,305 738 53,466 20,567 (52,728) Operating income 106,543 73,587 134,412 32,956 (60,825) Interest expense (78,965) (57,810) (39,680) (21,155) (18,130) Loss on extinguishment of debt (247) — (3,374) (247) 3,374 Equity in income of unconsolidated real estate entities 245 — — 245 — Change in fair value of derivatives and other 14,251 (6,242) 8,698 20,493 (14,940) Unrealized credit loss (provision) (156) (574) (626) 418 52 Other income, net 209 31 378 178 (347) Income before taxes 41,880 8,992 99,808 32,888 (90,816) Income tax benefit (provision) 614 (1,329) 145 1,943 (1,474) Net income 42,494 7,663 99,953 34,831 (92,290) Net income attributable to noncontrolling interests in investment entities (43) (605) (5,948) 562 5,343 Preferred stock dividends (11,548) (11,548) (11,548) — — Net income (loss) attributable to common stockholders and OP Unitholders $ 30,903 $ (4,490) $ 82,457 $ 35,393 $ (86,947) 54 Table of Contents Rental revenues by segment for the years ended December 31, 2024, 2023, and 2022 were as follows (in thousands): Years Ended December 31, 2024 2023 2024 2023 2022 Change Change Retail $ 103,435 $ 99,924 $ 87,788 $ 3,511 $ 12,136 Office 95,007 82,855 74,970 12,152 7,885 Multifamily 58,255 56,145 56,536 2,110 (391) $ 256,697 $ 238,924 $ 219,294 $ 17,773 $ 19,630 Rental revenues increased $17.8 million, or 7.4%, during the year ended December 31, 2024 compared to the year ended December 31, 2023.
Amended Credit Facility On August 23, 2022, we entered into an amended and restated credit agreement (the "Credit Agreement"), which provides for a $550.0 million credit facility comprised of a $250.0 million senior unsecured revolving credit facility (the "revolving credit facility") and a $300.0 million senior unsecured term loan facility (the "term loan facility" and, together with the revolving credit facility, the "amended credit facility"), with a syndicate of banks.
Credit Facility On August 23, 2022, we entered into an amended and restated credit agreement (the "Credit Agreement"), which provides for a $550.0 million credit facility comprised of a $250.0 million senior unsecured revolving credit facility (the "revolving credit facility") and a $300.0 million senior unsecured term loan facility (the "term loan facility" and, together with the revolving credit facility, the "credit facility"), with a syndicate of banks.
The margin under each interest rate election depends on our total leverage.
The margin under each interest rate election depends on our total leverage.
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.
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.
(2) The adjustment for gain on operating real estate dispositions for the year ended December 31, 2023 excludes $0.7 million for gains on the dispositions of non-operating parcels at Market at Mill Creek and adjacent to Brooks Crossing Retail.
(2) The adjustment for gain on operating real estate dispositions for the year ended December 31, 2023 excludes $0.7 million for the gains on the dispositions of non-operating parcels at the Market at Mill Creek and adjacent to Brooks Crossing Retail.
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.
Our ability to borrow under the 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 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 credit facility if it becomes secured indebtedness) to total asset value of not more than 40%; • Ratio of secured recourse debt (excluding the 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.
The Credit Agreement also restricts the amount of capital that we can invest in specific categories of assets, such as unimproved land holdings, development properties, notes receivable, mortgages, mezzanine loans and unconsolidated affiliates, and restricts our ability to repurchase stock and units of limited partnership interest in the Operating Partnership during the term of the amended credit facility.
The Credit Agreement also restricts the amount of capital that we can invest in specific categories of assets, such as unimproved land holdings, development properties, notes receivable, mortgages, mezzanine loans and unconsolidated affiliates, and restricts our ability to repurchase stock and units of limited partnership interest in the Operating Partnership during the term of the credit facility.
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.
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 credit facility pending long-term financing.
We may, at any time, voluntarily prepay any loan under the amended credit facility in whole or in part without significant premium or penalty, except for those portions subject to an interest rate swap agreement. The Credit Agreement includes customary events of default, in certain cases subject to customary periods to cure.
We may, at any time, voluntarily prepay any loan under the credit facility in whole or in part without significant premium or penalty, except for those portions subject to an interest rate swap agreement. The Credit Agreement includes customary events of default, in certain cases subject to customary periods to cure.
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%.
The revolving credit facility bears interest at SOFR plus a margin ranging from 1.30% to 1.85% and a credit spread adjustment of 0.10%, and the term loan facility bears interest at SOFR plus a margin ranging from 1.25% to 1.80% and a credit spread adjustment of 0.10%, in each case depending on our total leverage.
On August 29, 2023, we increased the capacity of the revolving credit facility by $105.0 million by exercising the accordion feature in part, bringing the revolving credit facility capacity to $355.0 million and the total amended credit facility capacity to $655.0 million.
On August 29, 2023, we increased the capacity of the revolving credit facility by $105.0 million by exercising the accordion feature in part, bringing the revolving credit facility capacity to $355.0 million and the total credit facility capacity to $655.0 million.
Our principal executive office is located at 222 Central Park Avenue, Suite 2100, Virginia Beach, Virginia 23462 in the Armada Hoffler Tower at the Virginia Beach Town Center. In addition, we have a construction office located at 1300 Thames Street, Suite 30, Baltimore, Maryland 21231 in Thames Street Wharf at Harbor Point.
Our principal executive office is located at 222 Central Park Avenue, Suite 1000, Virginia Beach, Virginia 23462 in the Armada Hoffler Tower at the Virginia Beach Town Center. In addition, we have a construction office located at 1300 Thames Street, Suite 30, Baltimore, Maryland 21231 in Thames Street Wharf at Harbor Point.
See “—Real Estate Financing Segment Data” below for additional information regarding the real estate financing segment and its introduction as a reportable segment during the year ended December 31, 2023. Our general contracting and real estate services segment is conducted through our TRS.
See “—Real Estate Financing Segment Data” below for additional information regarding the real estate financing segment and its introduction as a reportable segment during the year ended December 31, 2024. Our general contracting and real estate services segment is conducted through our TRS.
See Note 3 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for a reconciliation of NOI to net income, the most directly comparable GAAP measure. We define same store properties as those that we owned and operated and that were stabilized for the entirety of both periods compared.
See Note 3 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for a reconciliation of NOI to net income, the most directly comparable GAAP measure. 49 Table of Contents We define same store properties as those that we owned and operated and that were stabilized for the entirety of both periods compared.
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.
Segment Results of Operations As of December 31, 2024, 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.
The "Base Rate" is equal to the highest of: (a) the Federal Funds Rate for such day, plus 0.50% (b) the rate of interest in effect for such day as publicly announced from time to time by the administrative agent as its “prime rate” for such day, (c) one month term SOFR for such day plus 0.01 basis points and (d) 1.00%.
The "Base Rate" is equal to the highest of: (a) the Federal Funds Rate for such day, plus 0.50% (b) the rate of interest in effect for such day as 60 Table of Contents publicly announced from time to time by the administrative agent as its “prime rate” for such day, (c) one month term SOFR for such day plus 0.01 basis points and (d) 1.00%.
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.
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.
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.
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 M&T term loan agreement includes customary events of default, in certain cases subject to customary cure periods.
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 are the sole general partner of our Operating Partnership and, as of December 31, 2024, we owned, through a combination of direct and indirect interests, 78.6% 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.
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.
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 credit facility to be immediately due and payable. We are currently in compliance with all covenants under the Credit Agreement.
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.
The Operating Partnership is the borrower under the credit facility, and its obligations under the credit facility are guaranteed by us and certain of our subsidiaries that are not otherwise prohibited from providing such guaranty. 58 Table of Contents The Credit Agreement contains customary representations and warranties and financial and other affirmative and negative covenants.
We amortize above and below-market ground lease assets as amortization of right-of-use assets – finance leases on a straight-line basis over the remaining term of the related leases. We capitalize the costs related to operating property acquisitions that do not meet the definition of a business.
We amortize above and below-market ground lease assets as depreciation and amortization on a straight-line basis over the remaining term of the related leases. We capitalize the costs related to operating property acquisitions that do not meet the definition of a business.
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.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 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 our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
For each construction contract, we identify the performance obligations, which typically include the delivery of a single building constructed according to the specifications of the contract.
For each construction contract, we 47 Table of Contents identify the performance obligations, which typically include the delivery of a single building constructed according to the specifications of the contract.
(f) We paid $13.3 million to reduce the swap fixed rate. (g) This interest rate swap agreement reduces our interest rate exposure on the $109.7 million senior construction loan secured by our Harbor Point Parcel 4 equity method investment . As such, the loan is not reflected on our consolidated balance sheets.
(c) This interest rate swap agreement reduces our interest rate exposure on the $109.7 million senior construction loan secured by our Harbor Point Parcel 4 equity method investment. As such, the loan is not reflected on our consolidated balance sheets. We also paid $3.9 million to reduce the swap fixed rate on October 13, 2023.
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.
As of December 31, 2024, we had unrestricted cash and cash equivalents of $70.6 million available for both current liquidity needs as well as development and redevelopment activities. As of December 31, 2024, we also had restricted cash in escrow of $1.6 million, some of which is available for capital expenditures and certain operating expenses at our operating properties.
During the year ended December 31, 2023, we repurchased 1,204,838 shares of common stock for a total of $12.6 million. During the year ended December 31, 2023, we did not repurchase any shares of Series A Preferred Stock. As of December 31, 2023, $37.4 million remained available for repurchases under the Share Repurchase Program.
During the year ended December 31, 2024, we did not repurchase any shares of common stock or Series A Preferred Stock. As of December 31, 2024, $37.4 million remained available for repurchases under the Share Repurchase Program.
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.
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. 65 Table of Contents The following table sets forth a reconciliation of FFO and Normalized FFO for each of the years ended December 31, 2024, 2023, and 2022 to net income, the most directly comparable GAAP measure: Years Ended December 31, 2024 2023 2022 (in thousands, except per share and unit amounts) Net income (loss) attributable to common stockholders and OP Unitholders $ 30,903 $ (4,490) $ 82,457 Depreciation and amortization, net (1) 88,754 95,208 71,971 Gain on operating real estate dispositions, net (2) (21,305) — (47,984) Impairment of real estate assets 1,494 — 201 FFO attributable to common stockholders and OP Unitholders 99,846 90,718 106,645 Acquisition, development, and other pursuit costs 5,531 84 37 Accelerated amortization of intangible assets and liabilities (5) (653) 215 Loss on extinguishment of debt 247 — 3,374 Unrealized credit loss provision (release) 156 574 626 Amortization of right-of-use assets - finance leases 1,578 1,349 1,110 Increase (decrease) in fair value of derivatives not designated as cash flow hedges 9,612 14,185 (8,698) Amortization of interest rate derivatives on designated cash flow hedges 422 4,210 3,849 Severance related costs 1,506 — — Normalized FFO available to common stockholders and OP Unitholders $ 118,893 $ 110,467 $ 107,158 Net income (loss) attributable to common stockholders and OP Unitholders per diluted share and unit $ 0.33 $ (0.05) $ 0.93 FFO attributable to common stockholders and OP Unitholders per diluted share and unit $ 1.08 $ 1.02 $ 1.21 Normalized FFO attributable to common stockholders and OP Unitholders per diluted share and unit $ 1.29 $ 1.24 $ 1.22 Weighted average common shares and units - diluted 92,326 88,864 88,192 ________________________________________ (1) The adjustment for depreciation and amortization excludes amortization of above and below-market ground lease assets.
However, if certain defaults or events of default exist, we may pay cash dividends to the extent necessary to (i) maintain our status as a REIT and (ii) avoid federal or state income excise taxes.
The TD term loan agreement limits our ability to pay cash dividends if a default has occurred and is continuing or would result therefrom. However, if certain defaults or events of default exist, we may pay cash dividends to the extent necessary to (i) maintain our status as a REIT and (ii) avoid federal or state income excise taxes.
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.
As of December 31, 2024, our stabilized operating property portfolio was comprised of 46 retail properties, 14 office properties, and 11 multifamily properties. In addition to our operating property portfolio, we had 2 retail properties, 1 office property, and 1 multifamily property in various stages of predevelopment, development, redevelopment, or stabilization as of December 31, 2024.
The M&T term loan facility has a scheduled maturity date of March 8, 2027, with a one-year extension option, subject to our satisfaction of certain conditions, including payment of a 0.075% extension fee.
The M&T term loan facility has a scheduled maturity date of March 8, 2027, with a one-year extension option, subject to our satisfaction of certain conditions, including payment of a 0.075% extension fee. On June 21, 2024, the M&T term loan facility commitment increased to $135.0 million as a result of adding a new lender to the facility.
The Operating Partnership is the borrower under the M&T term loan facility, and its obligations under the M&T term loan facility are guaranteed by us and certain of its subsidiaries that are not otherwise prohibited from providing such guaranty. The M&T term loan agreement contains customary representations and warranties and financial and other affirmative and negative covenants.
The Operating Partnership is the borrower under the M&T term loan facility, and its obligations under the M&T term 59 Table of Contents loan facility are guaranteed by us and certain of its subsidiaries that are not otherwise prohibited from providing such guaranty.
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 for the gain on the sale of The Residences at Annapolis Junction that was allocated to our joint venture partner. Inflation Substantially all of our office and retail leases provide for the recovery of increases in real estate taxes and operating expenses.
If the Company or the Operating Partnership attains investment grade credit ratings from both S&P Global Ratings and Moody’s Investors Service, Inc., we may elect to have borrowings become subject to interest rates based on such credit ratings.
If the Company or the Operating Partnership attains investment grade credit ratings from both S&P Global Ratings and Moody’s Investors Service, Inc., we may elect to have borrowings become subject to interest rates based on such credit ratings. Our unencumbered borrowing pool will support revolving borrowings of up to $258.0 million, as of December 31, 2024.
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.
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 increases in rental revenues and NOI resulted primarily due to the acquisition of The Interlock Office in May 2023 as well as increased occupancy at Wills Wharf.
The increases in rental revenues and NOI resulted primarily due to the receipt of a termination fee from one of our tenants at Wills Wharf and the addition of new tenants at Wills Wharf, as well as the acquisition of The Interlock Office in May 2023.
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.
During the year ended December 31, 2024, we did not issue any shares of Series A Preferred Stock under the ATM Program. Shares having an aggregate offering price of $178.5 million remained unsold under the ATM Program as of February 21, 2025.
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.
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 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 changes in third party construction backlog for each of the years ended December 31, 2024, 2023, and 2022 were as follows (in thousands): Years Ended December 31, 2024 2023 2022 Beginning backlog $ 472,170 $ 665,564 $ 215,518 New contracts/change orders 85,883 221,474 685,754 Work performed (434,269) (414,868) (235,708) Ending backlog $ 123,784 $ 472,170 $ 665,564 During the year ended December 31, 2024, we executed new contracts or change orders with Beatty Development Group related to the Harbor Point developments in Baltimore totaling $29.8 million in addition to the $0.4 million with Terwilliger Pappas in connection with the development of Solis Kennesaw, and $53.4 million with Dominion Realty Partners.
As of December 31, 2023, the Company held the following floating-to-fixed interest rate swaps ($ in thousands): Related Debt Notional Amount Index Swap Fixed Rate Debt effective rate Effective Date Expiration Date Floating rate pool of loans $ 50,000 1-month SOFR (a) 3.40 % 4.91 % 7/5/2023 1/1/2024 Constellation Energy Building 175,000 1-month SOFR (b) 1.84 % 3.46 % 4/3/2023 2/1/2024 Floating rate pool of loans 200,000 1-month SOFR (c) 3.39 % 4.90 % 7/1/2023 3/1/2024 Senior unsecured term loan 25,000 1-month SOFR (d) 0.42 % 1.82 % 4/1/2020 4/1/2024 Senior unsecured term loan 25,000 1-month SOFR (d) 0.33 % 1.73 % 4/1/2020 4/1/2024 Senior unsecured term loan 25,000 Daily SOFR (d) 0.44 % 1.84 % 4/1/2020 4/1/2024 Harbor Point Parcel 3 senior construction loan 90,000 1-month SOFR (e) 2.75 % 4.82 % 10/2/2023 10/1/2025 Floating rate pool of loans 330,000 1-month SOFR (f) 2.75 % 4.26 % 10/1/2023 10/1/2025 Harbor Point Parcel 4 senior construction loan 100,000 1-month SOFR (g) 2.75 % 5.12 % 11/1/2023 11/1/2025 Floating rate pool of loans 300,000 1-month SOFR (h) 2.75 % 4.26 % 12/1/2023 12/1/2025 Revolving credit facility and TD unsecured term loan 100,000 Daily SOFR 3.20 % 4.70 % 5/19/2023 5/19/2026 (i) Thames Street Wharf 67,894 Daily SOFR (d) 0.93 % 2.33 % 9/30/2021 9/30/2026 M&T unsecured term loan 100,000 1-month SOFR 3.50 % 4.90 % 12/6/2022 12/6/2027 Senior unsecured term loan 100,000 1-month SOFR 3.43 % 4.83 % 12/13/2022 1/21/2028 Total $ 1,687,894 (a) On July 6, 2023, we terminated a SOFR corridor of 1.00%-3.00% with a notional amount of $50.0 million and entered into this interest rate swap agreement.
Interest Rate Derivatives As of December 31, 2024, the Company held the following interest rate swap agreements ($ in thousands): Related Debt Notional Amount Index Swap Fixed Rate Debt Effective Rate Effective Date Expiration Date Harbor Point Parcel 3 senior construction loan $ 90,000 (a) 1-month SOFR 2.75 % 4.82 % 10/2/2023 10/1/2025 Floating rate pool of loans 330,000 (b) 1-month SOFR 2.75 % 4.33 % 10/1/2023 10/1/2025 Harbor Point Parcel 4 senior construction loan 100,000 (c) 1-month SOFR 2.75 % 5.12 % 11/01/2023 11/01/2025 Floating rate pool of loans 300,000 (d) 1-month SOFR 2.75 % 4.33 % 12/01/2023 12/01/2025 Revolving credit facility and TD unsecured term loan 100,000 (e) Daily SOFR 3.20 % 4.70 % 05/19/2023 5/19/2026 Thames Street Wharf loan 66,057 (f) Daily SOFR 0.93 % 2.33 % 09/30/2021 9/30/2026 M&T unsecured term loan 100,000 (f) 1-month SOFR 3.50 % 4.90 % 12/06/2022 12/06/2027 Liberty Retail & Apartments loan 21,000 (g) 1-month SOFR 3.43 % 4.93 % 12/13/2022 1/21/2028 Senior unsecured term loan 79,000 (g) 1-month SOFR 3.43 % 4.83 % 12/13/2022 1/21/2028 Total $ 1,186,057 (a) This interest rate swap agreement reduces our interest rate exposure on the $180.4 million senior construction loan secured by our Harbor Point Parcel 3 equity method investment .
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. The commitments may or may not be funded depending on a variety of circumstances including timing, credit metric hurdles, and other nonfinancial events occurring.
(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.
(b) Does not reflect the effect of any maturity extension options. (c) Includes debt subject to interest rate swap locks. (d) Represents the fair value of additional ground lease payments at 1405 Point over the approximately 38-year remaining lease term. As of December 31, 2024, we were in compliance with all loan covenants on our outstanding indebtedness.
Such analysis considers the contractual terms of the debt, including the period to maturity, credit characteristics, and other terms of the arrangements, which are Level 3 inputs in the fair value hierarchy (as described in Note 12 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K).
Such analysis considers the contractual terms of the debt, including the period to maturity, credit characteristics, and other terms of the arrangements, which are Level 3 inputs in the fair value hierarchy (as described in Note 13 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K). 48 Table of Contents Real Estate Impairment We evaluate our real estate assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
We also paid $3.9 million to reduce the swap fixed rate. (h) We paid $10.5 million to reduce the swap fixed rate. (i) Subject to cancellation by the counterparty beginning on May 1, 2025 and the first day of each month thereafter.
(d) We paid $10.5 million to reduce the swap fixed rate on November 16, 2023. (e) Subject to cancellation by the counterparty beginning on May 1, 2025 and the first day of each month thereafter. (f) Designated as a cash flow hedge.
If the carrying amount of a real estate asset exceeds its associated undiscounted expected future cash flows, we recognize an impairment loss to reduce the carrying amount of the real estate asset to its fair value based on marketplace participant assumptions. 48 Table of Contents Interest Income Interest income on notes receivable is accrued based on the contractual terms of the loans and when, in the opinion of management, it is deemed collectible.
If the carrying amount of a real estate asset exceeds its associated undiscounted expected future cash flows, we recognize an impairment loss to reduce the carrying amount of the real estate asset to its fair value based on marketplace participant assumptions.
Many loans provide for accrual of interest that will not be paid until maturity of the loan. Interest is recognized on these loans at the accrual rate subject to management's determination that accrued interest is ultimately collectible, based on the underlying collateral and the status of development activities, as applicable.
Interest is recognized on these loans at the accrual rate subject to management's determination that accrued interest is ultimately collectible, based on the underlying collateral and the status of development activities, as applicable. If management cannot make this determination, recognition of interest income may be fully or partially deferred until it is ultimately paid.
We are currently in compliance with all covenants under the TD term loan agreement. 62 Table of Contents Consolidated Indebtedness The following table sets forth our consolidated indebtedness as of December 31, 2023 ($ 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.
We are currently in compliance with all covenants under the TD term loan agreement. 61 Table of Contents Consolidated Indebtedness The following table sets forth our consolidated indebtedness as of December 31, 2024 ($ in thousands): Amount Outstanding Interest Rate (a) Effective Rate for Variable-Rate Debt Maturity Date (b) Balance at Maturity Secured Debt Red Mill South $ 4,502 3.57 % 3.57 % May 1, 2025 $ 4,383 The Everly 30,000 SOFR+ 1.50 % 5.83 % December 20, 2025 30,000 Encore Apartments & 4525 Main Street 52,187 2.93 % 2.93 % February 10, 2026 50,726 Southern Post 60,244 SOFR+ 2.25 % 6.58 % August 25, 2026 60,244 Thames Street Wharf 66,461 SOFR+ 1.30 % 2.33 % (c) September 30, 2026 64,072 Constellation Energy Building 175,000 SOFR+ 1.50 % 5.95 % November 1, 2026 175,000 Liberty 20,242 SOFR+ 1.50 % 4.93 % (c) September 27, 2027 19,230 Greenbrier Square 19,184 3.74 % 3.74 % October 10, 2027 18,049 Lexington Square 13,293 4.50 % 4.50 % September 1, 2028 12,044 Red Mill North 3,842 4.73 % 4.73 % December 31, 2028 3,295 Premier Apartments and Retail 29,415 5.53 % 5.53 % December 1, 2029 29,415 Greenside Apartments 30,321 3.17 % 3.17 % December 15, 2029 26,095 Smith's Landing 13,584 4.05 % 4.05 % June 1, 2035 384 The Edison 14,774 5.30 % 5.30 % December 1, 2044 100 The Cosmopolitan 39,461 3.35 % 3.35 % July 1, 2051 187 Total Secured Debt $ 572,510 $ 493,224 Unsecured Debt TD Unsecured Term Loan $ 95,000 SOFR+ 1.35%-1.90% 4.85 % (c) May 19, 2025 $ 95,000 Senior Unsecured Revolving Credit Facility 140,000 SOFR+ 1.30%-1.85% 6.42 % January 22, 2027 140,000 Senior Unsecured Revolving Credit Facility (Fixed) 5,000 SOFR+ 1.30%-1.85% 4.80 % (c) January 22, 2027 5,000 M&T Unsecured Term Loan 35,000 SOFR+ 1.25%-1.80% 6.22 % March 8, 2027 35,000 M&T Unsecured Term Loan (Fixed) 100,000 SOFR+ 1.25%-1.80% 4.90 % (c) March 8, 2027 100,000 Senior Unsecured Term Loan 271,000 SOFR+ 1.25%-1.80% 6.22 % January 21, 2028 271,000 Senior Unsecured Term Loan (Fixed) 79,000 SOFR+ 1.25%-1.80% 4.83 % (c) January 21, 2028 79,000 Total Unsecured Debt 725,000 725,000 Total Principal Balances $ 1,297,510 $ 1,218,224 Other notes payable (d) 6,121 Unamortized GAAP Adjustments (8,072) Indebtedness, Net $ 1,295,559 _______________________________________ (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, 47 Table of Contents such as design deficiencies and subcontractor defaults.
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.
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.
We consider factors such as the progress of development activities, including leasing activities, projected development costs, and 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.
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 $23.5 million compared to the year ended December 31, 2022.
Cash Flows Years Ended December 31, 2024 2023 Change ($ in thousands) Operating Activities $ 112,020 $ 93,314 $ 18,706 Investing Activities (26,701) (237,266) 210,565 Financing Activities (43,262) 122,253 (165,515) Net increase (decrease) in cash, cash equivalents, and restricted cash $ 42,057 $ (21,699) $ 63,756 Cash, cash equivalents, and restricted cash, beginning of period $ 30,166 $ 51,865 Cash, cash equivalents, and restricted cash, end of period $ 72,223 $ 30,166 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 (decrease) increase in cash, cash equivalents, and restricted cash $ (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 64 Table of Contents Net cash provided by operating activities for the year ended December 31, 2024 increased by $18.7 million compared to the year ended December 31, 2023.
Prior to any gross profit eliminations attributable to these projects, operating margin for the years ended December 31, 2023, 2022, and 2021 was 3.7%, 3.7%, and 4.2%, respectively. Segment revenues for the year ended December 31, 2023 increased $178.3 million compared to the year ended December 31, 2022.
Prior to any gross profit eliminations attributable to these projects, operating margin for the years ended December 31, 2024, 2023, and 2022 was 3.5%, 3.7%, and 3.7%, respectively. General contracting and real estate services segment gross profit for the year ended December 31, 2024 was materially consistent with the year ended December 31, 2023.
The increases in same store rental revenues and same store NOI resulted primarily from increased rental rates across multiple properties. 52 Table of Contents General Contracting and Real Estate Services Segment Data General contracting and real estate services revenues, expenses, and gross profit for the years ended December 31, 2023, 2022, and 2021 were as follows ($ 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.
Same store rental revenues and same store NOI for the year ended December 31, 2024 are materially consistent with the year ended December 31, 2023. 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, 2024, 2023, and 2022 were as follows ($ in thousands): Years Ended December 31, 2024 2023 2022 General contracting and real estate services revenues $ 433,177 $ 413,131 $ 234,859 General contracting and real estate services expenses 419,302 399,713 227,158 Segment gross profit 13,875 13,418 7,701 Operating margin (1) 3.2 % 3.2 % 3.3 % ________________________________________ (1) 50% and 90% of gross profit attributable to our T.
(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.
Off-Balance Sheet Arrangements In connection with certain of our real estate financing activities and equity method investments, we have provided guarantees to pay portions of certain senior loans of third parties associated with the development projects.
Same store rental revenues for the year ended December 31, 2023 increased $2.0 million, or 4.6%, compared to the year ended December 31, 2022. Same store NOI for the year ended December 31, 2023 increased $1.0 million, or 3.7%, compared to the year ended December 31, 2022.
The impact of the same is included in Non-Same Store NOI for the year ended December 31, 2024. 51 Table of Contents Same store rental revenues and same store NOI for the year ended December 31, 2024 increased $4.8 million, or 6.2%, and $3.7 million, or 7.7%, respectively, compared to the year ended December 31, 2023.
ATM Program On March 10, 2020, we commenced the ATM Program through which we may, from time to time, issue and sell shares of our common stock and shares of our Series A Preferred Stock having an aggregate offering price of up to $300.0 million, to or through our sales agents and, with respect to shares of our common stock, may enter into separate forward sales agreements to or through the forward purchaser.
ATM Program On March 10, 2020, we commenced the ATM Program through which we may, from time to time, issue and sell shares of our common stock and Series A Preferred Stock having an aggregate offering price of up to $300.0 million, to or through our sales agents and, with respect to shares of our common stock, may enter into separate forward sales agreements to or through one or more forward purchasers. 57 Table of Contents During the year ended December 31, 2024, we issued and sold 2,288,541 shares of common stock at a weighted average price of $11.58 per share under the ATM Program, receiving net proceeds, after offering costs and commissions, of $26.1 million.
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. We consider factors such as the progress of development activities, including leasing activities, projected development costs, and current and projected loan balances.
Interest income is also accrued as earned on interest-bearing deposits. 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.
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.
Rental revenues and NOI for the year ended December 31, 2024 increased $12.2 million, or 14.7%, and $9.8 million, or 19.0%, respectively, compared to the year ended December 31, 2023.
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.
Subject to available borrowing capacity, we intend to use future borrowings under the credit facility for general corporate purposes, including funding acquisitions, mezzanine lending, and development and redevelopment of properties in our portfolio, and for working capital.
We recognize real estate services revenues from property development and management as we satisfy our performance obligations under these service arrangements.
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.
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.
As of December 31, 2024, SOFR was 4.32%. (2) Assumes the $145.0 million revolving credit facility balance outstanding as of December 31, 2024 remains constant through maturity of the facility.
Gain on real estate dispositions, net for the year ended December 31, 2023 totaled $0.7 million and related to the disposition of non-operating outparcels at Market at Mill Creek and Brooks Crossing Retail.
Gain on real estate dispositions, net for the year ended December 31, 2024 were due to the disposition of the Nexton Square and Market at Mill Creek retail properties.
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.
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.
The change was primarily attributable to an increase in operating assets and liabilities of $24.3 million during the year ended December 31, 2023. Net cash used for investing activities for the year ended December 31, 2023 increased by $204.0 million compared to the year ended December 31, 2022.
The change was primarily attributable to an increase in portfolio NOI and timing of receipts and payables for the construction business. Net cash used for investing activities for the year ended December 31, 2024 decreased by $210.6 million compared to the year ended December 31, 2023.
Interest expense for the year ended December 31, 2023 increased $18.1 million, or 45.7%, compared to the year ended December 31, 2022 primarily due to higher levels of indebtedness in connection with the funding of development projects, real estate financing investments, and acquisitions, partially offset by debt paid off in connection with dispositions in 2022.
Interest expense for the year ended December 31, 2024 increased $21.2 million, or 36.6%, compared to the year ended December 31, 2023 primarily due to higher levels of indebtedness throughout the year in connection with the funding of development projects and real estate financing investments, as well as the expiration of derivatives designated as cash flow hedges.
Contractual Obligations The following table summarizes the future payments for known contractual obligations as of December 31, 2023 (in thousands): Payments due by period Less than More than Contractual Obligations 1 year 1 year Total Principal payments and maturities of long-term indebtedness $ 70,207 $ 1,330,997 $ 1,401,204 Interest payments on long-term indebtedness (1) (2) 64,112 148,692 212,804 Ground and other operating leases 5,419 461,089 466,508 Tenant-related and other commitments 17,038 3,670 20,708 Total (3) (4) $ 156,776 $ 1,944,448 $ 2,101,224 ________________________________________ (1) For long-term debt that bears interest at variable rates, we estimated future interest payments using the SOFR forward curve as of December 31, 2023.
Contractual Obligations The following table summarizes the future payments for known contractual obligations as of December 31, 2024 (in thousands): Payments due by period Less than More than Contractual Obligations 1 year 1 year Total Principal payments and maturities of long-term indebtedness $ 136,701 $ 1,160,809 $ 1,297,510 Interest payments on long-term indebtedness (1) (2) 57,482 104,995 162,477 Ground and other operating leases 5,473 455,617 461,090 Tenant-related and other commitments 24,112 — 24,112 Total (3) (4) $ 223,768 $ 1,721,421 $ 1,945,189 ________________________________________ (1) For long-term debt that bears interest at variable rates, we estimated future interest payments using the SOFR forward curve as of December 31, 2024.
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.
As of December 31, 2024, our scheduled principal repayments and maturities during each of the next five years and thereafter were as follows ($ in thousands): Year (1)(2)(3) Amount Due Percentage of Total 2025 $ 136,701 11 % 2026 355,710 27 % 2027 321,819 25 % 2028 369,322 28 % 2029 59,167 5 % Thereafter 54,791 4 % Total $ 1,297,510 100 % ________________________________________ 62 Table of Contents (1) Does not reflect the exercise of any maturity extension options.
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.
As of December 31, 2024, we had $113.0 million of available borrowings under our revolving credit facility to meet our short-term liquidity requirements and $13.4 million of available borrowings under our construction loans to fund development activities. During the three months ended December 31, 2024, we decreased outstanding borrowings on our revolving credit facility by $19.0 million.
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.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Business Description We are a vertically-integrated, self-managed REIT with over four decades of experience managing high-quality properties located primarily in the Mid-Atlantic and Southeastern United States.
(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.
Amounts also include unused credit facility fees assuming the balance outstanding as of December 31, 2024 remains constant through maturity of our revolving credit facility. 63 Table of Contents (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.
(e) This interest rate swap agreement reduces our interest rate exposure on the $180.4 million senior construction loan secured by our Harbor Point Parcel 3 equity method investment . As such, the loan is not reflected on our consolidated balance sheets. We also paid $3.6 million to reduce the swap fixed rate.
As such, the loan is not reflected on our consolidated balance sheets. We also paid $3.6 million to reduce the swap fixed rate on September 8, 2023. (b) We paid $13.3 million to reduce the swap fixed rate on September 8, 2023.
As of December 31, 2023, we had an outstanding guarantee liability of $0.1 million related to the $32.9 million payment guarantee for the senior loan on Harbor Point Parcel 4. As of December 31, 2023, no amounts have been funded on this senior loan.
As of December 31, 2024, we had an outstanding guarantee liability of $0.1 million related to the $32.9 million guarantee of the senior loan secured by Harbor Point Parcel 4. 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.
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.
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, 2024, our off-balance sheet arrangements consisted of $32.7 million of unfunded commitments of our notes receivable.
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.
Rental expenses by segment for each of the years ended December 31, 2024, 2023, and 2022 were as follows (in thousands): Years Ended December 31, 2024 2023 2024 2023 2022 Change Change Retail $ 18,221 $ 16,470 $ 13,980 $ 1,751 $ 2,490 Office 25,048 22,708 19,003 2,340 3,705 Multifamily 19,141 17,241 17,759 1,900 (518) $ 62,410 $ 56,419 $ 50,742 $ 5,991 $ 5,677 Rental expenses increased $6.0 million, or 10.6%, during the year ended December 31, 2024 compared to the year ended December 31, 2023.
The real estate financing portfolio thereby serves as a development pipeline, particularly for growth in our multifamily real estate segment. 53 Table of Contents Real estate financing interest income, interest expense, 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 Interest income $ 14,176 $ 16,461 $ 18,026 Interest expense 3,667 3,497 2,833 Segment gross profit $ 10,509 $ 12,964 $ 15,193 Operating margin 74.1 % 78.8 % 84.3 % Real estate financing gross profit for the year ended December 31, 2023 decreased 18.9% compared to the year ended December 31, 2022, primarily due to the accelerated recognition of minimum interest income on the Nexton Multifamily preferred equity investment in the fourth quarter of 2022, the satisfaction of The Interlock mezzanine loan in the second quarter of 2023, and rising interest rates, largely offset by interest rate derivatives.
Real Estate Financing Segment Data Real estate financing interest income, interest expense, and gross profit for the years ended December 31, 2024, 2023, and 2022 were as follows (in thousands): Years Ended December 31, 2024 2023 2022 Interest income $ 16,077 $ 14,176 $ 16,461 Interest expense 6,588 3,667 3,497 Segment gross profit $ 9,489 $ 10,509 $ 12,964 Operating margin 59.0 % 74.1 % 78.8 % 53 Table of Contents Real estate financing gross profit for the year ended December 31, 2024 decreased 9.7% compared to the year ended December 31, 2023, primarily due to the effect of increased funded balances and the increase to allocated interest expense in connection therewith, partially offset by an increase in recognized interest income.
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.
Rental revenues for the year ended December 31, 2024 increased $3.5 million, or 3.5%, compared to the year ended December 31, 2023. The increase in rental revenues resulted primarily due to less bad debt recognized in 2024. NOI for the year ended December 31, 2024 is materially consistent with the year ended December 31, 2023.
The change was primarily attributable to proceeds received from dispositions in 2022, as well as increases in real estate financing note receivable issuances in 2023. Net cash provided by (used for) financing activities during the year ended December 31, 2023 increased by $194.4 million compared to the year ended December 31, 2022.
Net cash provided by (used for) financing activities during the year ended December 31, 2024 decreased by $165.5 million compared to the year ended December 31, 2023. The change was primarily attributable to increases of cash paid to extinguish debt, partially offset by the cash proceeds from the issuance of common stock throughout the year.
General contracting and real estate services expenses for the year ended December 31, 2023 increased $172.6 million, or 76.0%, compared to the year ended December 31, 2022. The increase resulted primarily from the timing of completion of third-party contracts in 2023 and higher contract volume. Depreciation and amortization.
General contracting and real estate services expenses for the year ended December 31, 2024 increased $19.6 million, or 4.9%, compared to the year ended December 31, 2023, primarily due to an increase in work performed in the execution of our backlog.
General and administrative expenses for the year ended December 31, 2023 increased $2.4 million, or 15.5%, compared to the year ended December 31, 2022. The increase resulted primarily from increased employee headcount as well as higher compensation, benefits, and training and development costs resulting from increased investment in human capital.
General and administrative expenses for the year ended December 31, 2024 increased $2.1 million, or 11.6%, compared to the year ended December 31, 2023. The increase resulted primarily due to increased salaries and compensation and severance costs.
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.
The adjustment for depreciation and amortization for the years ended December 31, 2024, 2023, and 2022 excludes $0.9 million, $0.9 million and $1.0 million, respectively, of depreciation attributable to our partners.
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 .
Changes in unrealized credit loss provision for the year ended December 31, 2024 were primarily the result of the release of the provision related to the Solis City Park II real estate financing investment, which was partially offset by increases in note receivable balances for the real estate financing investments and the closing of the Solis North Creek real estate financing investment.

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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 changeAssuming 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
Biggest changeAssuming no change in 66 Table of Contents 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 $1.9 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 to increase by 100 basis points, our cash flow would decrease by approximately $1.9 million per year.
As 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.
As of December 31, 2024 and excluding unamortized GAAP adjustments, 93.7% of our outstanding debt is either fixed rate or economically hedged after the effect of interest rate swaps and caps. As of December 31, 2024, SOFR was approximately 4.32%.

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