Core Viewpoint - Diversified REITs are currently undervalued, trading at an implied cap rate of 9.2%, which is 24% lower than the average implied cap rate of 7.4149% that they should trade at based on their underlying assets [20][21]. Group 1: REIT Structure and Valuation - REITs must derive at least 75% of their income from passive real estate assets, with many having nearly all assets in physical real estate [1]. - The market price of a REIT should generally align with the value of its underlying real estate, but significant dislocations can occur, particularly in diversified REITs [2][3]. - Diversified REITs own multiple types of real estate, and their valuation should reflect a weighted average of the cap rates of these asset types [4][5]. Group 2: Cap Rate Analysis - Cap rate is defined as the net operating income (NOI) as a percentage of the sale price, with implied cap rates reflecting the market's valuation of REITs based on their NOI [6][9]. - The average implied cap rates for various property sectors are: Industrial at 6.5%, Multifamily at 5.9%, Retail at 7%, Office at 9.9%, and Diversified at 9.2% [13]. - The calculated average implied cap rate for diversified REITs is significantly lower than the expected cap rate based on their asset types, indicating a potential investment opportunity [20]. Group 3: Market Disparities and Investment Opportunities - The 24% gap between the current trading cap rate of diversified REITs and the calculated cap rate suggests that these REITs are undervalued [20][21]. - Factors contributing to this valuation disparity include the size of the companies, thematic investing trends, and the complexity of analyzing diversified REITs [29][31][33]. - Despite the challenges, the fundamental value remains intact, presenting an opportunity for investment in diversified REITs [34][35].

Group 1 - The investment approach has received over 500 five-star reviews, indicating high satisfaction among members who are experiencing benefits [1] - The company invests significant resources, over $100,000 annually and thousands of hours, into researching profitable real estate investment opportunities [1] - REIT share prices (VNQ) have been on a steady decline for the past three years due to rising interest rates, leading to some of the highest yields seen in many years [1] Group 2 - Jussi Askola leads the High Yield Landlord investing group, providing real-time updates on his REIT portfolio and transactions [2] - The group offers features such as three distinct portfolios (core, retirement, international), buy/sell alerts, and direct access to analysts for inquiries [2] - Jussi Askola is the President of Leonberg Capital, a value-oriented investment firm that consults various investment entities on REIT investing [2]

Part I. Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) 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](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) 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](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income) 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](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) 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 distributions[11](index=11&type=chunk) - Dividends and distributions declared on common shares and units totaled **$25.5 million** ($0.280 per share/unit) during the first six months of 2025[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) 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](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) 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](index=17&type=chunk) - 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 financing[30](index=30&type=chunk) - 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 million**[55](index=55&type=chunk)[56](index=56&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) 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 2024[170](index=170&type=chunk) - 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 completions[170](index=170&type=chunk)[183](index=183&type=chunk) - 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 facility[147](index=147&type=chunk)[174](index=174&type=chunk) [Segment Results of Operations](index=39&type=section&id=Segment%20Results%20of%20Operations) 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](index=43&type=section&id=Consolidated%20Results%20of%20Operations) 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](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) 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 facility[209](index=209&type=chunk) - 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 prior[210](index=210&type=chunk) - No shares were issued under the ATM Program in the first half of 2025; **$178.5 million** remains available as of August 1, 2025[213](index=213&type=chunk) - No shares were repurchased in the first half of 2025; **$37.4 million** remains available under the Share Repurchase Program[215](index=215&type=chunk) [Non-GAAP Financial Measures](index=53&type=section&id=Non-GAAP%20Financial%20Measures) 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](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) 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, 2024[263](index=263&type=chunk) [Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) 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, 2025[265](index=265&type=chunk) - **No material changes** were made to the internal control over financial reporting during the quarter ended June 30, 2025[266](index=266&type=chunk) Part II. Other Information [Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) 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 **material**[269](index=269&type=chunk) [Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) 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 occurred[270](index=270&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) 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 repurchases[273](index=273&type=chunk) - During Q2 2025, **11,918 shares** were surrendered by employees to satisfy tax obligations related to vested restricted stock awards[274](index=274&type=chunk)[275](index=275&type=chunk) [Other Information](index=57&type=section&id=Item%205.%20Other%20Information) 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, 2025[278](index=278&type=chunk) [Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q

Core Viewpoint - Armada Hoffler Properties (AHH) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based on the Zacks Consensus Estimate, which reflects EPS estimates from sell-side analysts for the current and following years [2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, making the Zacks rating system useful for investors [3][5]. Impact of Institutional Investors - Institutional investors utilize earnings estimates to determine the fair value of a company's shares, leading to buying or selling actions that affect stock prices [5]. Business Improvement Indicators - The upgrade for Armada Hoffler Properties signifies an improvement in the company's underlying business, which is expected to drive the stock price higher [6]. Earnings Estimate Revisions - For the fiscal year ending December 2025, Armada Hoffler Properties is projected to earn $1.05 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 2.3% over the past three months [9]. Zacks Rank System Performance - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [8]. - The upgrade to Zacks Rank 2 places Armada Hoffler Properties in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [11].

Core Viewpoint - Armada Hoffler (NYSE: AHH) has faced significant market disfavor, particularly following a 33.3% dividend cut in March, which the author disagrees with, suggesting that the sell-off is unwarranted [1]. Company Analysis - The company is currently experiencing a negative perception in the market, primarily due to the recent dividend reduction [1]. - The author emphasizes a long-term investment strategy focused on identifying undervalued Real Estate Investment Trusts (REITs) that are temporarily out of favor [1]. Investment Strategy - The investment approach is characterized by a contrarian and deep-value perspective, aiming to uncover intrinsic value through fundamental economic insights [1].

Core Viewpoint - Armada Hoffler Properties reported strong normalized FFO per diluted share of $0.25, significantly surpassing analyst expectations, despite a substantial decline in total revenue due to challenges in the construction business [1][5][8] Financial Performance - Total revenue for Q2 2025 was $101.3 million, down 45.2% from $184.7 million in Q2 2024, primarily due to a steep decline in construction and real estate services revenue [2][5] - Normalized FFO per diluted share decreased by 26.5% year over year, from $0.34 to $0.25 [2] - Rental revenue increased by 3%, rising to $65.1 million from $63.3 million [6] Operational Highlights - The company maintained high occupancy rates across its portfolio, with a weighted average occupancy of 94.9% [6] - Retail renewal spreads were 10.8% (GAAP) and 5.5% (Cash), while office renewal spreads were 11.7% (GAAP) and 5.5% (Cash), indicating effective lease management [7] - The construction backlog decreased to $106.6 million, reflecting a strategic shift away from third-party projects [8] Strategic Focus - Armada Hoffler is concentrating on core property-level income and has shifted focus from fee-based construction to stable rental income [5][8] - The company is actively managing its financial position, with total debt rising to $1.45 billion as of June 30, 2025, and has issued $115.0 million in senior notes to refinance variable-rate loans [9] - The quarterly dividend was set at $0.14 per share to align with property-level cash flow [10] Future Guidance - Management reaffirmed full-year 2025 guidance for normalized FFO per share at $1.00 to $1.10, with construction segment gross profit expected between $4.8 million and $6.8 million [13] - The company is prioritizing portfolio stabilization and prudent development, with a focus on replacing declining construction revenue with stable property NOI [14]

Financial Data and Key Metrics Changes - Armada Hoffler reported normalized FFO of $0.25 per diluted share, consistent with expectations and guidance [22][23] - Same store NOI increased by 1.4% on a GAAP basis and 0.3% on a cash basis [23] - AFFO came in at $18.4 million or $0.18 per diluted share, reflecting alignment between operating cash flows and restructured dividend [23][27] Business Line Data and Key Metrics Changes - Office occupancy remained high at 96.3% with positive re-leasing spreads of 11.7% [5] - Retail occupancy was reported at 94.2% with renewal spreads of 10.8% [5] - Multifamily occupancy experienced a modest dip to 94%, attributed to seasonal turnover and macroeconomic pressures [17] Market Data and Key Metrics Changes - The retail portfolio successfully backfilled former big box vacancies with higher credit retailers, achieving a weighted average rent increase of 33% [9] - The office portfolio remains essentially full at 96% occupancy, with minimal vacancy and strong demand for remaining space [12][13] - Recent trends indicate a shift in demand from traditional office spaces to amenity-rich environments, with 54% of Fortune 100 companies returning to fully in-office work [14] Company Strategy and Development Direction - The company is focused on transitioning away from reliance on fee income towards higher quality recurring property-level earnings [6][8] - Armada Hoffler aims to enhance its balance sheet and financial flexibility through strategic debt management, including a recent $115 million private placement [8][24] - The company is committed to maintaining a high-performing portfolio and optimizing property-level performance through operational excellence [5][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's ability to deliver consistent NOI growth and reaffirmed full-year guidance [6][28] - The company is well-positioned to benefit from continued execution across its portfolio, particularly in retail leasing and office occupancy [21] - Management acknowledged potential headwinds in the market but emphasized the strength of the balance sheet to mitigate risks [33] Other Important Information - The company is actively evaluating opportunities within its real estate financing platform, including potential acquisitions of high-quality multifamily assets [19][20] - The AFFO payout ratio stands at 77.8%, indicating a disciplined approach to capital allocation [27] Q&A Session Summary Question: Can you provide details on potential scenarios that would lead to achieving the lower or upper end of the guidance range? - Management believes the guidance range is appropriate, with upside potential from the leasing of the Allied asset and slight increases in construction guidance [32][33] Question: What is the expected downtime for the vacated WeWork office floor? - Management indicated that it is early in the process, with some interest in the space, but it is too early to determine the exact timeline for leasing [37][38] Question: What are the cap rate expectations for multifamily asset acquisitions and dispositions? - Management expects cap rates around 6% for multifamily acquisitions and mid-sixes for the disposition of a fully leased asset [40][42] Question: How are you thinking about upcoming maturities of loans? - Management has extended the TD term loan for another twelve months and is exploring options for the Everly loan, with flexibility in the current market [45][46] Question: What is the strategy for potential strategic dispositions over the next six to twelve months? - Management is reviewing assets for potential sales, focusing on opportunities where market dislocation can be leveraged for growth [51][52]

Company Overview - Armada Hoffler (AHH) is a vertically integrated REIT focused on developing, building, acquiring, and managing retail, office, and multifamily properties primarily in the Mid-Atlantic and Southeastern US[3] - The company's weighted average stabilized portfolio occupancy was 949% as of June 30, 2025[6] Financial Performance (Q2 2025) - Second Quarter Normalized FFO per diluted share was $025[6] - Net income attributable to AHH and OP Unitholders was $3907 thousand, or $004 per diluted share[11] - Total revenues reached $101263 thousand, with rental revenues contributing $65147 thousand and general contracting and real estate services revenues at $31976 thousand[13] 2025 Outlook - The company projects a property portfolio NOI between $1736 million and $1760 million[8] - Construction segment profit is expected to be between $50 million and $70 million[8] - Normalized FFO per diluted share is projected to be between $100 and $110[8] Debt and Leverage - Total debt outstanding as of June 30, 2025, was $1448237 thousand[11] - The company's stabilized portfolio debt to stabilized portfolio adjusted EBITDAre was 52x[11] - As of June 30, 2025, 938% of the company's debt was fixed-rate, with a weighted average interest rate of 44%[30, 31, 38]

分组1 - Armada Hoffler Properties reported quarterly funds from operations (FFO) of $0.25 per share, missing the Zacks Consensus Estimate of $0.26 per share, and down from $0.34 per share a year ago, resulting in an FFO surprise of -3.85% [1] - The company posted revenues of $65.15 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.94%, compared to year-ago revenues of $63.26 million [2] - Armada Hoffler Properties shares have declined approximately 34.6% since the beginning of the year, while the S&P 500 has gained 6.1% [3] 分组2 - The current consensus FFO estimate for the coming quarter is $0.27 on revenues of $63.92 million, and for the current fiscal year, it is $1.05 on revenues of $255.59 million [7] - The Zacks Industry Rank for REIT and Equity Trust - Residential is currently in the top 39% of over 250 Zacks industries, indicating that the industry outlook can significantly impact stock performance [8]

[Armada Hoffler Q2 2025 Earnings Release](index=1&type=section&id=Armada%20Hoffler%20Q2%202025%20Earnings%20Release) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) The company reported higher GAAP Net Income but lower Normalized FFO per share, maintaining strong portfolio occupancy Q2 2025 Key Financial Metrics (per diluted share) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **GAAP Net Income** | $0.04 | $0.00 | | **FFO** | $0.19 | $0.25 | | **Normalized FFO** | $0.25 | $0.34 | Stabilized Portfolio Occupancy (as of June 30, 2025) | Segment | Occupancy Rate | | :--- | :--- | | **Overall** | 94.9% | | **Retail** | 94.2% | | **Office** | 96.3% | | **Multifamily** | 94.0% | - The company achieved positive renewal spreads across its commercial segments, indicating strong leasing demand[3](index=3&type=chunk) Q2 2025 Commercial Renewal Spreads | Segment | GAAP Basis | Cash Basis | | :--- | :--- | :--- | | **Retail** | 10.8% | 5.5% | | **Office** | 11.7% | 5.5% | - During the quarter, the company executed 14 renewals and 10 new commercial leases, totaling approximately **161,000 net rentable square feet**[1](index=1&type=chunk)[3](index=3&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) Net income increased due to a one-time gain, while FFO and Normalized FFO declined from lower contracting profit and higher interest expense [Key Financial Metrics (YoY Comparison)](index=2&type=section&id=Key%20Financial%20Metrics%20(YoY%20Comparison)) A significant one-time gain boosted net income, while lower general contracting profit and higher expenses reduced FFO and Normalized FFO - The increase in net income from $0.4 million in Q2 2024 to **$3.9 million in Q2 2025** was primarily due to a **$6.9 million gain** on the consolidation of Allied | Harbor Point[4](index=4&type=chunk) - FFO decreased from $22.4 million to **$19.0 million** year-over-year, mainly due to lower general contracting gross profit, higher interest expense, and equity losses from unconsolidated entities[5](index=5&type=chunk) - Normalized FFO decreased from $30.2 million to **$25.4 million** year-over-year, also driven by a decline in general contracting gross profit and equity losses[5](index=5&type=chunk) FFO & Normalized FFO Reconciliation Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net Income attributable to common stockholders** | $3,907 | $375 | | **FFO attributable to common stockholders** | $18,971 | $22,439 | | **Normalized FFO available to common stockholders** | $25,390 | $30,204 | [Consolidated Balance Sheet](index=6&type=section&id=Consolidated%20Balance%20Sheet) Total assets and liabilities grew, driven by increases in income-producing properties and net indebtedness respectively Selected Balance Sheet Data (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Net real estate investments** | $1,977,732 | $1,745,078 | | **Total Assets** | $2,576,671 | $2,512,863 | | **Indebtedness, net** | $1,446,820 | $1,295,559 | | **Total Liabilities** | $1,715,880 | $1,623,194 | | **Total Equity** | $860,791 | $889,669 | [Consolidated Income Statement](index=7&type=section&id=Consolidated%20Income%20Statement) Total revenues declined due to lower contracting activity, but operating and net income increased, boosted by a consolidation gain Selected Income Statement Data (in thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Total revenues** | $101,263 | $184,736 | | **Operating income** | $19,968 | $18,555 | | **Gain on consolidation of real estate entities** | $6,915 | $— | | **Net income** | $6,717 | $3,279 | [Operating Performance](index=2&type=section&id=Operating%20Performance) The stabilized portfolio maintained high occupancy, Same Store NOI grew, and the construction backlog stood at $106.6 million [Portfolio Performance & Leasing Activity](index=2&type=section&id=Portfolio%20Performance%20%26%20Leasing%20Activity) The portfolio showed strong occupancy across all segments, with positive rental rate spreads on commercial lease renewals Stabilized Operating Portfolio Occupancy (Q2 2025) | Segment | Occupancy Rate | | :--- | :--- | | **Retail** | 94.2% | | **Office** | 96.3% | | **Multifamily** | 94.0% | - Positive renewal spreads were achieved in both the retail segment (**10.8% GAAP, 5.5% Cash**) and the office segment (**11.7% GAAP, 5.5% Cash**)[3](index=3&type=chunk) - A total of **161,000 net rentable square feet** were leased through 14 renewals and 10 new commercial leases in Q2 2025[3](index=3&type=chunk) [Construction and Development](index=2&type=section&id=Construction%20and%20Development) The third-party construction contract backlog was $106.6 million, with the segment generating $1.4 million in gross profit - The total third-party construction contract backlog was **$106.6 million** as of June 30, 2025[7](index=7&type=chunk)[8](index=8&type=chunk) - General contracting and real estate services gross profit for the second quarter was **$1.4 million**[8](index=8&type=chunk) [Same Store Net Operating Income (NOI)](index=2&type=section&id=Same%20Store%20Net%20Operating%20Income%20(NOI)) Same Store NOI increased by 1.4% on a GAAP basis, driven by growth in the Office and Multifamily segments - Overall Same Store Net Operating Income (NOI) **increased by 1.4%** on a GAAP basis compared to the quarter ended June 30, 2024[8](index=8&type=chunk) Same Store NOI by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Retail** | $18,236 | $18,143 | | **Office** | $15,263 | $15,027 | | **Multifamily** | $8,014 | $7,777 | [Balance Sheet and Financing](index=2&type=section&id=Balance%20Sheet%20and%20Financing) The company managed $1.4 billion in debt, with 94% fixed or hedged, and executed significant post-quarter financing activities - Total debt outstanding was **$1.4 billion** as of June 30, 2025, of which **94% was fixed or economically hedged**[10](index=10&type=chunk) - On June 10, 2025, the company acquired the remaining interest in its Harbor Point Parcel 4 project, making it a wholly owned subsidiary[8](index=8&type=chunk) - On July 22, 2025, the company issued **$115.0 million of senior unsecured notes** to repay a $65.0 million construction loan and $48.0 million under its revolving credit facility[8](index=8&type=chunk) - On July 24, 2025, the company entered into four interest rate swap agreements with a total notional value of **$820.0 million**[8](index=8&type=chunk) [2025 Full-Year Outlook](index=3&type=section&id=2025%20Full-Year%20Outlook) The company reaffirmed its full-year 2025 Normalized FFO guidance range of $1.00 to $1.10 per diluted share - The company maintained its 2025 full-year Normalized FFO guidance range of **$1.00 to $1.10 per diluted share**[11](index=11&type=chunk) Full-Year 2025 Guidance Assumptions | Metric | Expected Range | | :--- | :--- | | **Portfolio NOI** | $173.6 M - $176.0 M | | **Construction Segment Gross Profit** | $5.0 M - $7.0 M | | **G&A Expenses** | ($17.2 M) - ($16.4 M) | | **Interest Income** | $15.3 M - $16.3 M | | **Adjusted Interest Expense** | ($64.7 M) - ($60.7 M) | - Key operational assumptions for the second half of 2025 include the stabilization of the Southern Post Commercial project in Q4, the acquisition of two real estate financing investments, and one property disposition[14](index=14&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) The company uses FFO, Normalized FFO, and NOI to provide clearer insight into its core operational performance - FFO is calculated according to Nareit standards, which excludes real estate-related depreciation and amortization and gains/losses from property sales to better represent operational performance[18](index=18&type=chunk)[19](index=19&type=chunk) - Normalized FFO adjusts FFO for certain non-comparable items, such as property acquisition costs, mark-to-market adjustments for interest rate derivatives, and severance costs, which management believes provides a more useful performance measure[22](index=22&type=chunk) - NOI is calculated as segment revenues less segment expenses and is the primary measure used by the company's chief operating decision-maker to assess the performance of its business segments[23](index=23&type=chunk) [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) A conference call to discuss Q2 2025 financial results is scheduled for August 5, 2025, at 8:30 a.m. Eastern Time - A webcast and conference call to discuss Q2 2025 results is scheduled for **Tuesday, August 5, 2025, at 8:30 a.m. Eastern Time**[15](index=15&type=chunk) - Dial-in numbers for the live call are **(+1) 800 549 8228 (toll-free)** and **(+1) 646 564 2877 (toll)**, with conference ID **67471**[15](index=15&type=chunk)