Armada Hoffler Properties, Inc. Q1 FY2025 earnings call

• Strong portfolio performance across office, retail, and multifamily segments with above 95% occupancy in all. - Office has 97.5% occupancy, no material lease expirations through 2027. - Multifamily had a blended 2.6% lease growth rate in Q1, with strong retention and rent growth strategies. - Retail had robust leasing activity, especially at grocery-anchored centers, and 85% of space from former troubled tenants is under lease/LOI to higher credit quality tenants at 25% higher rents. - Reset quarterly dividend to $0.14 per share in mid-March, fully supported by operating property cash flow. - Ongoing redevelopment projects like Columbus Village and Liberty Apartments to unlock incremental value. - T. Rowe Price moved into their new global headquarters at Harbor Point in March.

Office: Occupancy was 97.5%, same-store office NOI increased by 9.2% on a GAAP basis and 6.3% on a cash basis. Office releasing spreads rose by 23.3% on a GAAP basis and 3.7% on a cash basis. Multifamily: Blended lease growth rate for the quarter was 2.6%, with releasing spreads of 5.4%, and in April, renewal spreads were 5.1% and new lease spreads rebounded to 4.1%. Retail: Leasing activity remained robust, especially at grocery-anchored centers, with mixed-use retail assets maintaining above 95% occupancy as the complementary blend of components created a self-reinforcing demand ecosystem.

• Reaffirmed full year 2025 normalized FFO guidance of $1 to $1.10 per diluted share. - Unchanged guidance despite some construction projects coming out of initial guidance, as increased property-level performance and expense management will offset decreased construction income. - Hedged $150 million notional amounts with a swap fixed rate of 2.5% to mitigate interest rate volatility.

• Macro uncertainty including tariffs and economic conditions impacting business. - Interest rate volatility as hedging was done but rates may remain elevated. - Potential tenant issues with JOANN, Party City, Conn's, though 85% of their space is under lease/LOI. - Construction leaks in multifamily community Greenside and Charlotte impacting some units, but work is ongoing to improve value. - Debt capital markets remaining selective, affecting acquisition and disposition opportunities.

Q: Has macro uncertainty translated to changes in office or retail leasing conversations?

A: Shawn Tibbetts said activity on the portfolio side hasn't seen impact to-date, with strength in leasing space.

Q: Thoughts on portfolio composition and acquisition/ disposition?

A: Matthew Barnes-Smith said short-term disposition and acquisition challenging due to market uncertainty, but long-term open to mixed-use communities and their office product is 97.5% occupied and happy with it.

Q: On retailer tenant watch list and exposure?

A: Shawn Tibbetts mentioned JOANN, Party City, Conn's, with 85% of their space under lease/LOI at 20%-25% higher rents.

Q: Impact of Johns Hopkins financing cut on Baltimore multifamily?

A: Shawn Tibbetts said no significant impact seen yet, with residents moving to newer trophy-quality assets and T-Rowe employees adding traffic.

Q: Tenant rollover and impact?

A: Shawn Tibbetts discussed upcoming rollovers like Office Depot in Durham and Safeway, with backfill identified and renewals in progress.

Q: Redevelopment projects status?

A: Shawn Tibbetts said projects are relatively small, with Liberty Apartments nearly complete, Columbus Village in progress, etc.