As an analyst, I usually start my articles by going over the most recent quarterly results. This time I won't be going over the Q4 2025 results. Why? Effective March 2, Armada Hoffler Properties (I'm Luuk Wierenga, an economics teacher from the Netherlands with a strong passion for income investing. My investment journey began during the COVID-19 pandemic, and since then, I've specialized in identifying Real Estate Investment Trusts (REITs) that are temporarily out-of-favor with Mr. Market. As an educator, ...

Real estate financing investments: The company has an LOI with an institutional buyer to acquire interests in two of four investments and is discussing an exit from a third with its partner. The fourth investment is being marketed, with Tibbetts noting comparable cap rates in the low-5 cap range and expectations for a near-term closing.Construction business: Tibbetts said the exit is “effectively complete,” with terms “substantially finalized” with a buyer.Multifamily: The company is under a letter of inten ...

Financial Data and Key Metrics Changes - For Q4 2025, normalized FFO attributable to common shareholders was $29.5 million or $0.29 per diluted share, exceeding expectations [24] - FFO attributable to common shareholders was $23.1 million or $0.23 per diluted share, while AFFO was $17.8 million or $0.17 per diluted share [25] - Same-store NOI for the portfolio increased 6.3% on a GAAP basis and 7.1% on a cash basis [25] - For the full year 2025, normalized FFO attributable to common shareholders was $110.1 million or $1.08 per diluted share, above guidance [27] Business Line Data and Key Metrics Changes - Retail same-store NOI for Q4 was up 5.6% on a GAAP basis and 3.4% on a cash basis, driven by new leasing and rent commencements [15] - Office same-store NOI for Q4 was up over 10% GAAP and nearly 17% cash, supported by leasing and rent commencements [19] - Year-over-year, office same-store NOI increased 6% GAAP and 7% cash, with occupancy gains at key properties [19] Market Data and Key Metrics Changes - Retail same-store results year-over-year were up 1% GAAP and down 1% cash, impacted by anchor space vacancies due to bankruptcies [15] - Year-end occupancy was just under 95%, affected by temporary seasonal tenants [16] - The office portfolio fundamentals remain strong, with nearly eight years of WALT and only 1.7% rollover in 2026 [23] Company Strategy and Development Direction - The company announced a rebranding to AH Realty Trust, effective March 2nd, marking a strategic transformation [5] - Planned divestitures include the multifamily portfolio and fee income businesses to simplify operations and improve income predictability [6][7] - The focus will shift to retail and office assets in growing markets, aiming for a streamlined operating model and reduced leverage [9][10] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of maintaining full dividend coverage from cash flows generated by operating properties while reducing debt [11] - The company expects 2026 to be a transition year, with guidance reflecting discontinued operations and a focus on disciplined growth [10][12] - Management is confident in the ability to drive consistent NOI growth through proactive leasing and tenant retention [23] Other Important Information - The company is under an LOI for 11 of its 14 multifamily assets, with negotiations progressing towards final terms [7] - The exit of the construction business is nearly complete, and discussions are ongoing for the real estate financing investments [8] - The company aims to improve its long-term growth trajectory and deliver shareholder value more consistently [9] Q&A Session Summary Question: Long-term growth trajectory and financing plans for acquisitions - Management indicated a balanced approach to leverage and capital allocation, emphasizing the need for shares to trade at the right level relative to NAV for future acquisitions [37][38] Question: Expected retail to office NOI split in five years - Management expressed a focus on both retail and office, with an emphasis on retail in the short term while remaining open to opportunities in both sectors [40][41] Question: Context on mixed-use communities and office investments - Management confirmed a capability in mixed-use developments but emphasized a current focus on retail investments, with a willingness to sell office assets if pricing is favorable [46][48] Question: Update on multifamily dispositions - Management is under LOI for 11 assets, aiming for competitive pricing in the mid-5 cap range, with significant progress made in negotiations [50][51] Question: Dividend payout ratio trends - Management indicated a conservative approach to capital allocation, with a focus on maintaining a healthy dividend while simplifying and deleveraging the company [52][53] Question: Development as part of long-term strategy - Management acknowledged the importance of development but indicated a preference for acquisitions in the near term, with surgical development opportunities considered [58][59] Question: Expected growth in core businesses for 2026 - Management noted that 2026 may be a gap year for growth due to vacancies but anticipates stronger growth in 2027 [62]

Armada Hoffler Properties (NYSE:AHH) Q4 2025 Earnings call February 17, 2026 08:30 AM ET Company ParticipantsAndrew Berger - Equity Research AssociateChelsea Forrest - VP of Investor RelationsCraig Ramiro - EVP of Asset ManagementJon Petersen - Managing DirectorMatthew Barnes-Smith - CFOShawn Tibbetts - Chairman, President, and CEOViktor Fediv - Senior Equity Research AssociateOperatorThis call is being recorded on Tuesday, February 17, 2026. I would now like to turn the conference over to Chelsea Forrest, ...

Financial Data and Key Metrics Changes - For Q4 2025, normalized FFO attributable to common shareholders was $29.5 million or $0.29 per diluted share, exceeding expectations [25] - FFO attributable to common shareholders was $23.1 million or $0.23 per diluted share, while AFFO was $17.8 million or $0.17 per diluted share [26] - Same-store NOI for the portfolio increased 6.3% on a GAAP basis and 7.1% on a cash basis [26] - For the full year 2025, normalized FFO attributable to common shareholders was $110.1 million or $1.08 per diluted share, above guidance [26] - Same-store NOI for the full year increased 2.8% on a GAAP basis and 2% on a cash basis [27] Business Line Data and Key Metrics Changes - Retail same-store NOI for Q4 was up 5.6% on a GAAP basis and 3.4% on a cash basis, driven by new leasing and rent commencements [15] - Office same-store NOI for the quarter was up over 10% GAAP and nearly 17% cash, supported by leasing and rent commencements [19] - Year-over-year, office same-store NOI increased 6% GAAP and 7% cash [19] Market Data and Key Metrics Changes - Retail same-store results year-over-year were up 1% GAAP and down 1% cash, impacted by anchor space vacancy due to bankruptcies [15] - Year-end occupancy was just under 95%, affected by temporary seasonal tenants [16] - The office portfolio fundamentals remain strong, with nearly 8 years of vault and only 1.7% rollover in 2026 [24] Company Strategy and Development Direction - The company announced a rebranding to AH Realty Trust, effective March 2, marking a significant transformation [5] - Plans include exiting the multifamily portfolio and fee income businesses to simplify operations and improve income predictability [6][9] - The focus will be on retail and office assets in growing markets, with a strategy to enhance shareholder value through disciplined capital allocation [6][9] - The company aims to reduce leverage by approximately two full turns, strengthening the balance sheet [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining full dividend coverage from cash flows generated by operating properties while reducing debt [11] - The transition year of 2026 is expected to focus on discipline, high quality, and consistent growth, with a simplified operating model [12] - Management believes the transformation will lead to predictable earnings and sustainable cash flow growth [13] Other Important Information - The company is under an LOI for 11 of its 14 multifamily assets, indicating strong interest from credible parties [7] - The exit of the construction business is nearly complete, and discussions are ongoing for the exit of real estate financing investments [8] Q&A Session Summary Question: Long-term growth trajectory and financing plans - Management indicated a balanced approach to leverage and capital allocation, emphasizing the need for shares to trade at the right level relative to NAV for future acquisitions [37][38] Question: Future retail to office NOI split - The company plans to operate where it can add the most value, focusing on both retail and office, with a $50 million capital allocation for acquisitions [40][41] Question: Mixed-use communities and office investments - Management confirmed a focus on mixed-use communities while remaining open to selling office assets if pricing is favorable [46][48] Question: Multifamily dispositions and pricing - The company is under LOI for 11 assets, targeting mid-5 cap range pricing, with significant progress made in negotiations [50][51] Question: Dividend payout ratio trends - Management aims to maintain a conservative approach to capital and dividend payouts, focusing on deleveraging and simplifying the company [52][53] Question: Development as part of long-term strategy - While open to development opportunities, the company currently prioritizes acquisitions due to higher capital costs [57]

GUIDANCE PRESENTATION 2026 2026 OUTLOOK: CONTINUED OPERATIONS | $ IN MILLIONS | | | | --- | --- | --- | | | LOW | HIGH | | RETAIL NOI | $68.5M | $70.0M | | OFFICE NOI | $58.5M | $60.0M | | EQUITY METHOD INVESTMENT ("EMI") PROPERTY INCOME(1) | $3.4M | $3.9M | | ACQUISITION NOI | $1.0M | $1.7M | | TOTAL COMMERCIAL NOI | $131.4M | $135.6M | | G&A EXPENSES | -$19.7M | -$18.7M | | INTEREST EXPENSE | -$57.2M | -$54.2M | | OTHER NOI(2) | $8.9M | $9.9M | | PREFERRED STOCK DIVIDENDS | -$11.5M | -$11.5M | | PRO FORMA ...

Financial Performance - Full Year FFO per diluted share was $0.78, with a normalized FFO of $1.08, and a weighted average stabilized portfolio occupancy of 95.3% as of December 31, 2025[6]. - Total revenues for the year ended December 31, 2025, reached $285,201,000, up from $274,068,000 in 2024, indicating a year-over-year increase of 4.1%[9]. - Rental revenues increased to $71,952,000 for the three months ended December 31, 2025, compared to $62,953,000 for the same period in 2024, representing a growth of 17.5%[9]. - Net income attributable to AHH and OP unitholders was a loss of $957,000 for the three months ended December 31, 2025, compared to a profit of $26,140,000 in the same period of 2024[9]. - The company reported a net income of $1,962,000 for the same period, with a loss of $1,628,000 from the multifamily real estate segment[75]. Debt and Liabilities - The total debt as of December 31, 2025, was $1,526,584,000, an increase from $1,487,257,000 in the previous quarter[10]. - Total liabilities as of Q4 2025 amounted to $1,612,347, with mortgages and notes payable at $1,526,584[14]. - The company’s total outstanding debt as of December 31, 2025, is $1,526,584,000, with $590,584,000 classified as secured debt[29]. - The company has a significant amount of unsecured debt maturing in 2026 and 2027, totaling $376,000,000 and $375,000,000 respectively[29]. - The net debt to adjusted EBITDAre ratio for Q4 2025 was 7.1x, indicating a stable leverage position[18]. Operational Metrics - The stabilized portfolio occupancy for retail was 94.9%, office was 96.4%, and multifamily was 94.6% as of December 31, 2025[7]. - The average occupancy rate for the stabilized multifamily portfolio is 94.6% as of December 31, 2025[53]. - The stabilized retail properties portfolio has a total net rentable area of 3,823,373 square feet with an overall occupancy rate of 94.9%[114]. - The company’s office properties portfolio has a total net rentable area of 2,336,610 square feet with an occupancy rate of 96.4%[114]. - The occupancy rate for the stabilized multifamily properties was highest at 100% for Smith's Landing, while the lowest was 88.3% for Chandler Residences[116]. Revenue and Income Growth - Same store NOI for retail increased by 5.6% year-over-year to $18,357 for the three months ended December 31, 2025, and by 1.1% to $71,773 for the year[51]. - Same store NOI for office properties increased by 10.4% year-over-year to $15,338 for the three months ended December 31, 2025, and by 6.3% to $61,607 for the year[51]. - Mixed Use rental revenues increased by 8.2% to $38,518,000 for the three months ended December 31, 2025, and by 3.4% to $150,819,000 for the year[54]. - Non-Mixed Use rental revenues rose by 3.7% to $23,919,000 for the three months ended December 31, 2025, and by 2.7% to $94,267,000 for the year[54]. - The total annual base rent (ABR) for stabilized retail properties is $74,262,784, averaging $20.47 per occupied square foot[114]. Capital Expenditures and Investments - The company has ongoing redevelopment projects with a total estimated cost of $17,975,000, including the Columbus Village II project, expected to complete in Q1 2026[68]. - The company acquired Solis Gainesville II in Q4 2025 for $60,380,000, consisting of 184 units with a cash cap rate of 4.4%[80]. - The company’s total portfolio capital expenditures for the year ended December 31, 2025, were $31,409[120]. - Capital expenditures for the total portfolio in Q4 2025 amounted to $10,883, with retail segment expenditures at $5,124[119]. Market and Shareholder Information - The market price per common share decreased to $6.62 as of the last trading day of the quarter, down from $7.01 in the previous quarter[7]. - The company’s common equity represents 29% of total capitalization, with a market value of $686,474[38]. - The total weighted average common shares and OP units outstanding as of Q4 2025 was 103,697, an increase from 101,904 in Q4 2024[11]. - The debt service coverage ratio is 2.5x, indicating strong cash flow relative to debt obligations[36]. Forward-Looking Statements and Risks - Forward-looking statements may involve known and unknown risks and uncertainties that could cause actual results to differ from projections[123]. - Risk factors that may affect actual results are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024[123]. - The Company disclaims any obligation to update or revise forward-looking statements unless required by law[123]. - The Company’s actual future results may differ materially from expectations due to various factors discussed in SEC filings[123].

Core Viewpoint - The company is undergoing a significant transformation, rebranding as AH Realty Trust, to streamline operations, strengthen its balance sheet, and focus on long-term shareholder value creation [1][9]. Group 1: Business Restructuring - The company is executing a fundamental business restructuring aimed at eliminating complexity and establishing a new strategic direction [1]. - A year-long examination has led to a rebuilt strategy, operating model, and capital allocation priorities to create a more disciplined platform [1]. - The company is exiting the multifamily property sector and divesting its construction and real estate financing businesses to sharpen its focus on retail and office properties [6]. Group 2: Asset Sales and Capital Allocation - The company has entered into a letter of intent for the potential sale of 11 out of 14 multifamily assets, with expectations for completion in 2026 [2]. - Proceeds from these sales will primarily be directed towards debt reduction, targeting a net debt to total adjusted EBITDA ratio of 5.5x–6.5x [3]. - The company is also evaluating acquisition opportunities in markets that align with its operational strengths [5]. Group 3: Leadership and Governance - Shawn Tibbetts has assumed the role of Chairman of the Board, providing unified leadership for the strategic plan [8]. - The executive team has been expanded with cross-industry expertise to enhance operational execution and accountability [8]. - The company is modernizing its executive compensation program to align with shareholder return metrics [8]. Group 4: New Investment Mandate - The new investment strategy focuses on expanding the retail real estate portfolio, reflecting confidence in the segment's cash flow and growth potential [4]. - The company aims to target investments in markets with strong fundamentals that support sustained future rent growth [4]. Group 5: Rebranding and Corporate Identity - The company will officially rebrand as AH Realty Trust on March 2, 2026, with new trading symbols on the NYSE [10][11]. - The rebranding will not affect the organizational structure or stockholder rights, and no action is required from securityholders [11].

Core Insights - Armada Hoffler Properties, Inc. reported a GAAP net loss of $0.01 per diluted share for Q4 2025 and $0.08 per diluted share for the full year 2025, compared to a net income of $0.26 per diluted share for Q4 2024 [1][4][7] - The company achieved a normalized FFO of $0.29 per diluted share for Q4 2025 and $1.08 per diluted share for the full year 2025, reflecting an increase from $0.27 per diluted share in Q4 2024 [1][6][7] - Office same-store NOI growth was reported at 10.4% on a GAAP basis, with positive renewal spreads in both office (9.1% GAAP) and retail (15.3% GAAP) segments [1][4][6] Financial Results - The net loss attributable to common stockholders for Q4 2025 was $1.0 million, a significant decline from a net income of $26.1 million in Q4 2024, primarily due to prior gains from property dispositions [4][5] - FFO for Q4 2025 was $23.1 million, down from $29.7 million in Q4 2024, attributed to decreased unrealized gains on derivatives and increased interest expenses [6][7] - Normalized FFO for Q4 2025 increased to $29.5 million from $27.8 million in Q4 2024, driven by higher portfolio NOI [6][7] Operating Performance - As of December 31, 2025, the company's weighted average stabilized portfolio occupancy was 95.3%, with retail occupancy at 94.9%, office occupancy at 96.4%, and multifamily occupancy at 94.6% [4][8] - Same Store NOI increased by 6.3% on a GAAP basis compared to Q4 2024 [4][6] Balance Sheet and Financing Activity - Total debt outstanding as of December 31, 2025, was $1.5 billion, with 96% of the debt being fixed or economically hedged [9] - The company acquired Solis Gainesville II on December 10, 2025, which included the repayment of a $26.9 million preferred equity investment [4][7] Recent Developments - The Board of Directors appointed Shawn J. Tibbetts as Chairman effective January 1, 2026, completing a succession plan initiated in 2024 [4][6] - New retail leases were opened in Q4 2025 at Columbus Village II, contributing to the overall occupancy rate of 95.3% [4][6]

Core Viewpoint - The article discusses the best Real Estate Investment Trusts (REITs) to consider for investment as February 2026 approaches, starting with the lowest to the highest yielders [1]. Group 1: Company Analysis - Invitation Homes (INVH) is highlighted as one of the REITs under consideration for investment [1].