Armada Hoffler Properties(US:AHH)2025-08-07 21:09Part I. Financial Information Financial Statements The company's total assets increased to $2.58 billion, while net income and operating cash flow significantly decreased year-over-year Condensed Consolidated Balance Sheets Total assets grew to $2.58 billion, driven by income-producing property investments, while total equity slightly decreased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $2,576,672 | $2,512,863 | | Net real estate investments | $1,977,732 | $1,745,078 | | Cash and cash equivalents | $52,111 | $70,642 | | Total Liabilities | $1,715,881 | $1,623,194 | | Indebtedness, net | $1,446,820 | $1,295,559 | | Total Equity | $860,791 | $889,669 | Condensed Consolidated Statements of Comprehensive (Loss) Income Net income for Q2 2025 improved year-over-year, but the six-month period showed a net loss due to a sharp decline in general contracting revenues Financial Performance Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $101,263 | $184,736 | $215,906 | $378,218 | | General contracting revenues | $31,976 | $116,839 | $78,590 | $243,814 | | Net income | $6,717 | $3,279 | $2,374 | $21,004 | | Net income (loss) attributable to common stockholders | $3,062 | $285 | $(2,630) | $11,471 | | Diluted EPS | $0.04 | $— | $(0.03) | $0.17 | Condensed Consolidated Statements of Equity Total equity decreased to $860.8 million, primarily due to dividends, distributions, and a net loss for the period - Total equity declined by $28.9 million in the first six months of 2025, driven by net loss, dividends, and distributions11 - Dividends and distributions declared on common shares and units totaled $25.5 million ($0.280 per share/unit) during the first six months of 202511 Condensed Consolidated Statements of Cash Flows Net cash from operating activities decreased significantly, leading to a net decrease in cash of $17.6 million for the six-month period Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $11,210 | $63,880 | | Net cash used for investing activities | $(38,982) | $(53,182) | | Net cash provided by (used for) financing activities | $10,150 | $(19,167) | | Net decrease in cash | $(17,622) | $(8,469) | Notes to Condensed Consolidated Financial Statements The notes detail the company's operations as a vertically integrated REIT, key segment information, and a significant property consolidation - The company is a vertically integrated, self-managed REIT focused on retail, office, and multifamily properties primarily in the Mid-Atlantic and Southeastern U.S.17 - The company operates in five business segments: retail real estate, office real estate, multifamily real estate, general contracting and real estate services, and real estate financing30 - On April 29, 2025, the company acquired the remaining interest in the Harbor Point Parcel 4 (Allied | Harbor Point) project, leading to its full consolidation and a recognized gain of $6.9 million5556 Management's Discussion and Analysis of Financial Condition and Results of Operations Normalized FFO declined due to a weaker construction business, though the real estate portfolio remained resilient and the company advanced its unsecured debt strategy Q2 2025 Key Performance Indicators | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income (to common stockholders) | $3.9M | $0.4M | | Diluted EPS | $0.04 | $0.00 | | Normalized FFO | $25.4M | $30.2M | | Normalized FFO per share | $0.25 | $0.34 | | Stabilized Portfolio Occupancy | 94.9% | N/A | - Same Store Net Operating Income (NOI) increased by 1.4% on a GAAP basis compared to Q2 2024170 - The third-party construction backlog stood at $106.6 million as of June 30, 2025, with a gross profit of $1.4 million for the quarter, a significant decrease from the prior year due to project completions170183 - Subsequent to quarter-end, on July 22, 2025, the company issued $115.0 million of senior unsecured notes to repay a construction loan and pay down its revolving credit facility147174 Segment Results of Operations Office and Multifamily NOI grew due to property consolidations, while Retail NOI decreased from dispositions and the General Contracting segment saw a significant profit decline Segment Net Operating Income (NOI) / Gross Profit - Q2 2025 vs Q2 2024 (in thousands) | Segment | Q2 2025 | Q2 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Retail | $18,311 | $19,280 | $(969) | (5.0)% | | Office | $15,445 | $14,779 | $666 | 4.5% | | Multifamily | $8,724 | $8,233 | $491 | 6.0% | | General Contracting | $1,384 | $4,339 | $(2,955) | (68.1)% | | Real Estate Financing | $1,746 | $2,199 | $(453) | (20.6)% | Same Store NOI Growth - Q2 2025 vs Q2 2024 | Segment | Same Store NOI Change | % Change | | :--- | :--- | :--- | | Retail | +$0.1M | 0.5% | | Office | +$0.2M | 1.6% | | Multifamily | +$0.2M | 3.0% | Consolidated Results of Operations Total revenues decreased significantly due to a drop in general contracting, but a gain on consolidation helped increase net income Consolidated Results - Q2 2025 vs Q2 2024 (in thousands) | Line Item | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $101,263 | $184,736 | $(83,473) | | Total Expenses | $81,295 | $166,181 | $(84,886) | | Operating Income | $19,968 | $18,555 | $1,413 | | Gain on consolidation | $6,915 | $— | $6,915 | | Net Income | $6,717 | $3,279 | $3,438 | Liquidity and Capital Resources The company maintained adequate liquidity through cash and credit facilities while continuing its strategic shift toward unsecured debt - Liquidity sources as of June 30, 2025 include $52.1 million in cash and $114.5 million available on the revolving credit facility209 - The company is continuing its strategic shift to unsecured debt, which represented 54.5% of total borrowings as of June 30, 2025, up from 53.9% a year prior210 - No shares were issued under the ATM Program in the first half of 2025; $178.5 million remains available as of August 1, 2025213 - No shares were repurchased in the first half of 2025; $37.4 million remains available under the Share Repurchase Program215 Non-GAAP Financial Measures Both FFO and Normalized FFO decreased year-over-year, reflecting weaker performance from the general contracting segment FFO and Normalized FFO Reconciliation (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income (loss) attributable to common stockholders | $3,907 | $375 | | FFO attributable to common stockholders | $18,971 | $22,439 | | FFO per diluted share | $0.19 | $0.25 | | Normalized FFO attributable to common stockholders | $25,390 | $30,204 | | Normalized FFO per diluted share | $0.25 | $0.34 | Quantitative and Qualitative Disclosures about Market Risk The company's market risk exposure has not materially changed since the end of fiscal year 2024 - There have been no material changes to the Company's market risk since December 31, 2024263 Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025265 - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2025266 Part II. Other Information Legal Proceedings The company is not involved in any legal proceedings expected to have a material effect on its business - The company is not a party to any legal proceedings that it believes to be material269 Risk Factors No material changes have occurred from the risk factors previously disclosed in the company's Annual Report - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 have occurred270 Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased under the share repurchase program, and no unregistered equity securities were sold during the period - No shares were repurchased under the company's Share Repurchase Program during Q2 2025. As of June 30, 2025, $37.4 million remained available for repurchases273 - During Q2 2025, 11,918 shares were surrendered by employees to satisfy tax obligations related to vested restricted stock awards274275 Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025278 Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q