Armada Hoffler Properties(AHH) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a normalized FFO of $0.27 per diluted share and an FFO of$0.29 per diluted share for Q4 2024, with a full-year FFO of $1.02 and normalized FFO of$1.29 per diluted share [10][37] - The overall portfolio occupancy at the end of Q4 stood at 96%, slightly increasing compared to the prior quarter [42] - The company provided a normalized FFO guidance range of $1 to$1.10 per diluted share for 2025, reflecting challenges such as construction delivery delays and increased interest expenses [46] Business Line Data and Key Metrics Changes - The retail segment achieved an 11.1% GAAP spread, while the office segment achieved an 18.7% GAAP spread, with all three segments posting positive releasing spreads [39] - The multi-family portfolio reported a combined trade-out spread of negative 0.8% for Q4, but year-to-date stabilized trade-outs have shown improvements with a combined trade-out of positive 0.6% [40] - The construction management segment posted $2.1 million of gross profit, with expectations for this segment's performance to return closer to historical levels in the short term [42] Market Data and Key Metrics Changes - The office assets in mixed-use environments are commanding around a 15$82 million, representing more than a 20% profit spread over cost [15] - The T. Rowe Price global headquarters is nearing completion, expected to bring 2,500 employees to the community [16] Q&A Session Summary Question: What does the market look like going forward on the Mez side? - Management is receiving inquiries about financing deals and is monitoring the lending market closely, but is not prepared to execute new investments at this time [52][54] Question: Can you comment on the dilution from recent equity raises and asset sales? - The equity raise in September resulted in roughly 5 cents worth of dilution per share after debt repayment [62][65] Question: How is the releasing process going for Southgate First with declining occupancy? - Management is actively negotiating with potential backfill tenants for closed stores and anticipates positive releasing activity [73][75] Question: Are there any active properties being marketed for capital recycling? - Management has received unsolicited interest in retail properties and is evaluating potential disposals based on quality and strategic alignment [80][84] Question: Can you provide details on the trajectory of FFO throughout 2025? - Management expects 2025 to be the trough year, with growth anticipated in 2026 as developments stabilize and operational efficiencies improve [90][92]