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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
FORM
10-K
 
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20172020 
or
◻☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-35908

ARMADA HOFFLER PROPERTIES, INC.
(Exact Name of Registrant as Specified in Its Charter)

Maryland46-1214914
(State or Other Jurisdictionother jurisdiction of
Incorporation incorporation or Organization)
organization)
(IRSI.R.S. Employer
Identification No.)
222 Central Park Avenue,Suite 2100
Virginia Beach Virginia,Virginia23462
(Address of Principal Executive Offices)principal executive offices)(Zip Code)
Registrant’s Telephone Number, Including Area CodeCode: (757) 366-4000

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Classeach classTrading Symbol(s)Name Of Each Exchange On Which Registeredof each exchange on which registered
Common Stock, $0.01 par value per shareAHHNew York Stock Exchange
6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per shareAHHPrANew York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ◻    x No  ☒ ◻
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    Yes  ◻    No  ☒ x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒x   No  ◻ 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒x    No  ◻ 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☒ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large"large accelerated filer,” “accelerated" "accelerated filer,” “smaller" "smaller reporting company,”" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filerx
Non-accelerated filer☐Smaller reporting company☐
Large accelerated filer¨Accelerated filer
x

Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company¨
Emerging growth company
x

☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨☐    No ¨x


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As of June 30, 2017,2020, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $573.6$556.8 million, based on the closing sales price of $12.95$9.95 per share as reported on the New York Stock Exchange. (For purposes of this calculation all of the registrant’s directors and executive officers are deemed affiliates of the registrant.)
As of February 21, 2018,19, 2021, the registrant had 45,100,35159,296,036 shares of common stock outstanding. In addition, as of February 19, 2021, Armada Hoffler, L.P., the registrant's operating partnership subsidiary (the "Operating Partnership"), had 20,853,485 common units of limited partnership interest ("OP Units") outstanding (other than OP Units held by the registrant). Based on the 59,296,036 shares of common stock and 20,853,485 OP Units held by limited partners other than the registrant, the registrant had a total common equity market capitalization of $1,005,876,489 as of February 19, 2021 (based on the closing sales price of $12.55 on the New York Stock Exchange on such date).

Documents Incorporated by Reference
Portions of the registrant’s Definitive Proxy Statement relating to its 20182021 Annual Meeting of Stockholders are incorporated by reference into Part III of this report. The registrant expects to file its Definitive Proxy Statement with the Securities and Exchange Commission within 120 days after December 31, 2017.2020.  


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Armada Hoffler Properties, Inc.
 
Form 10-K
For the Fiscal Year Ended December 31, 20172020
 
Table of Contents
 
Item 1. 
1
Item 1A. 
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Item 1B. 
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Item 2. 
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Item 3. 
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Item 4. 
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Item 5. 
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Item 6. 
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Item 7. 
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Item 7A. 
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Item 8. 
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Item 9. 
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Item 9A. 
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Item 9B. 
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Item 10. 
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Item 11. 
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Item 12. 
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Item 13. 
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Item 14. 
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Item 15. 
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Item 16.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. This report contains forward-looking statements within the meaning of the federal securities laws. We caution investors that any forward-looking statements presented in this report, or which management may make orally or in writing from time to time, are based on beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “result”"anticipate," "believe," "expect," "intend," "may," "might," "plan," "estimate," "project," "should," "will," "result" and similar expressions, which do not relate solely to historical matters, are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We caution you that while forward-looking statements reflect our good faith beliefs when we make them, they are not guarantees of future performance and are impacted by actual events when they occur after we make such statements. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.
 
Forward-looking statements involve numerous risks and uncertainties, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data, or methods which may be incorrect or imprecise, and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
•the continuing impacts of the novel coronavirus ("COVID-19") pandemic, including a possible resurgence, and measures intended to prevent or mitigate its spread, and our ability to accurately assess and predict such impacts on our results of operations, financial condition, acquisition and disposition activities, and growth opportunities;
•our ability to commence or continue construction and development projects on the timeframes and terms currently anticipated;
•our ability and the ability of our tenants to access funding under government programs designed to provide financial relief for U.S. businesses in light of the COVID-19 pandemic;
•continuing adverse economic or real estate developments, either nationally or in the markets in which our properties are located;located, including as a result of the COVID-19 pandemic;
our failure to develop the properties in our development pipeline successfully, on the anticipated timeline, or at the anticipated costs;
•our failure to generate sufficient cash flows to service our outstanding indebtedness;
•defaults on, early terminations of, or non-renewal of leases by tenants, including significant tenants;
•bankruptcy or insolvency of a significant tenant or a substantial number of smaller tenants;
•the inability of one or more mezzanine loan borrowers to repay mezzanine loans in accordance with their contractual terms;
•difficulties in identifying or completing development, acquisition, or disposition opportunities;
•our failure to successfully operate developed and acquired properties;
•our failure to generate income in our general contracting and real estate services segment in amounts that we anticipate;
•fluctuations in interest rates and increased operating costs;
•our failure to obtain necessary outside financing on favorable terms or at all;
•our inability to extend the maturity of or refinance existing debt or comply with the financial covenants in the agreements that govern our existing debt;
•financial market fluctuations;
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•risks that affect the general retail environment or the market for office properties or multifamily units;
•the competitive environment in which we operate;
•decreased rental rates or increased vacancy rates;
•conflicts of interests with our officers and directors;
•lack or insufficient amounts of insurance;

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•environmental uncertainties and risks related to adverse weather conditions and natural disasters;
•other factors affecting the real estate industry generally;
•our failure to maintain our qualification as a real estate investment trust (“REIT”("REIT") for U.S. federal income tax purposes;
•limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our qualification as a REIT for U.S. federal income tax purposes; and
•changes in governmental regulations or interpretations thereof, such as real estate and zoning laws and increases in real property tax rates and taxation of REITs; and
•potential negative impacts from the recent changes to the U.S. tax laws.
 
While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events, or other changes after the date of this Annual Report on Form 10-K, except as required by applicable law. We caution investors not to place undue reliance on these forward-looking statements. For a further discussion of these and other factors that could impact our future results, performance, or transactions, see the risk factors describeddiscussed in Item 1A1A. Risk Factors and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations herein and in other documents that we file from time to time with the Securities and Exchange Commission (the “SEC”"SEC").


Summary Risk Factors

Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows and prospects. These summary risks provide an overview of many of the risks we are exposed to in the normal course of our business and are discussed more fully in Item 1A. Risk Factors herein. These risks include, but are not limited to, the following:

•The ongoing COVID-19 pandemic and measures intended to prevent its spread could have a material adverse effect on our business, results of operations, cash flows, and financial condition.

•Our failure to establish new development relationships with public partners and expand our development relationships with existing public partners could have a material adverse effect on our results of operations, cash flow, and growth prospects.

•We may be unable to identify and complete development opportunities and acquisitions of properties that meet our investment criteria, which may materially and adversely affect our results of operations, cash flow, and growth prospects.

•Our real estate development activities are subject to risks particular to development, such as unanticipated expenses, delays, and other contingencies, any of which could materially and adversely affect our financial condition, results of operations, and cash flow.

•The geographic concentration of our portfolio could cause us to be more susceptible to adverse economic or regulatory developments in the markets in which our properties are located than if we owned a more geographically diverse portfolio.
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PARTI•We have a substantial amount of indebtedness outstanding, which may expose us to the risk of default under our debt obligations and may include covenants that restrict our ability to pay distributions to our stockholders.

•Mezzanine loans and similar loan investments are subject to significant risks, and losses related to these investments could have a material adverse effect on our financial condition and results of operations.

•We may be unable to renew leases, lease vacant space, or re-lease space on favorable terms or at all as leases expire, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.

•The short-term leases in our multifamily portfolio expose us to the effects of declining market rents, which could adversely affect our results of operations, cash flow, and cash available for distribution.

•Adverse economic and geopolitical conditions and dislocations in the credit markets could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.

•Our growth depends on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all, which could limit our ability to, among other things, meet our capital and operating needs or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.

•Adverse economic and regulatory conditions, particularly in the Mid-Atlantic region, could adversely affect our construction and development business, which could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.

•There can be no assurance that all of the projects for which our construction business is engaged as general contractor will be commenced or completed in their entirety in accordance with the anticipated cost or that we will achieve the financial results we expect from the construction of such properties.

•There can be no assurance that we will be able to realize the business objectives of our real estate investments through disposition or refinancing of such at attractive prices or within certain time periods, and any related illiquidity of our real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.

•Daniel Hoffler and his affiliates own, directly or indirectly, a substantial beneficial interest in our company on a fully diluted basis and have the ability to exercise significant influence on our company and our Operating Partnership, including the approval of significant corporate transactions.

•Our charter contains certain provisions restricting the ownership and transfer of our stock that may delay, defer, or prevent a change of control transaction that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests.

•Failure to maintain our qualification as a REIT would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distribution to our stockholders.

•We may be unable to make distributions at expected levels, which could result in a decrease in the market price of our common stock and Series A Preferred Stock.
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Item 1.Business. 
PARTI
Item 1.    Business. 
 
Our Company
 
References to “we,” “our,” “us”"we," "our," "us," and “our company”"our company" refer to Armada Hoffler Properties, Inc., a Maryland corporation, together with our consolidated subsidiaries, including Armada Hoffler, L.P., a Virginia limited partnership (the “Operating Partnership”"Operating Partnership"), of which we are the sole general partner.
 
We are a full servicefull-service real estate company with extensive experience developing, building, owning, and managing high-quality, institutional-grade office, retail, and multifamily properties in attractive markets primarily throughout the Mid-Atlantic and Southeastern United States. In addition to the ownership of our operating property portfolio, we develop and build properties for our own account and through joint ventures between us and unaffiliated partners.partners and also invest in development projects through mezzanine lending arrangements. We also provide general contracting services to third parties. Our construction and development experience includes mid- and high-rise office buildings, retail strip malls, and retail power centers, multifamily apartment communities, hotels and conference centers, single- and multi-tenant industrial, distribution, and manufacturing facilities, educational, medical and special purpose facilities, government projects, parking garages, and mixed-use town centers. Our most recent third-party construction contracts have included the mixed-use project The Interlock in Atlanta, Georgia, Boulder Lake Apartments in Chesterfield, Virginia, 27th Street Hotel in Virginia Beach and the Exelon Tower in Baltimore, Maryland. We also are proud to have completed numerous signature properties across the Mid-Atlantic region, such as the Inner Harbor East development in Baltimore, Maryland including the Four Seasons Hotel and Legg Mason office tower, the Mandarin Oriental Hotel in Washington, D.C., and a $50.0 million proton therapy institute for Hampton University in Hampton, Virginia. Our construction company historically has been ranked among the “Top 400 General Contractors” nationwide by Engineering News Record and has been ranked among the “Top 50 Retail Contractors” by Shopping Center World.
 
We were formed on October 12, 2012 under the laws of the State of Maryland and are headquartered in Virginia Beach, Virginia. We elected to be taxed as a REIT for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2013. Substantially all of our assets are held by, and all of our operations are conducted through, our Operating Partnership. As of December 31, 2017,2020, we owned, through a combination of direct and indirect interests, 72.0%73.9% of the common units of limited partnership interest in our Operating Partnership (“("OP Units”Units").  
 
20172020and Fourth Quarter Highlights
 
The following highlights our results of operations and significant transactions for the year ended December 31, 2017:2020: 
 
•Net income attributable to common stockholders and OP Unit holders of $29.9$29.8 million, or $0.50$0.38 per diluted share, compared to $42.8$29.6 million, or $0.85$0.41 per diluted share, for the year ended December 31, 2016.2019.


•Funds from operations (“FFO”attributable to common stockholders and OP Unit holders ("FFO") of $59.7$83.0 million, or $0.99$1.06 per diluted share, compared to $48.0$80.0 million, or $0.96$1.10 per diluted share, for the year ended December 31, 2016.2019.


•Normalized FFOfunds from operations attributable to common stockholders and OP Unit holders ("Normalized FFO") of $59.3$86.2 million, or $0.99$1.10 per diluted share, compared to $50.9$85.1 million, or $1.01$1.17 per diluted share, for the year ended December 31, 2016.2019.


•Property segment net operating income (“NOI”("NOI") of $72.8$109.4 million compared to $67.9$102.0 million for the year ended December 31, 2016:  2019:  


•Office NOI of $11.9$27.6 million compared to $13.4$21.1 million  

•Retail NOI of $46.7$54.2 million compared to $42.0$58.0 million 

•Multifamily NOI of $14.2$27.6 million compared to $12.5$22.9 million


•Same store NOI of $45.2$62.5 million compared to $46.8$66.0 million for the year ended December 31, 2016:  2019:  


•Office same store NOI of $8.2$13.3 million compared to $9.1$13.5 million

•Retail same store NOI of $27.0$36.8 million compared to $26.9$39.3 million

•Multifamily same store NOI of $10.0$12.4 million compared to $10.8$13.2 million 



•Stabilized portfolio occupancy by segment, excluding properties subject to ground leases, as of December 31, 20172020 compared to December 31, 2016:2019:


•Office occupancy at 89.9%97.0% compared to 86.8%

96.6%
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•Retail occupancy at 96.5%94.7% compared to 95.8%
96.9%

•Multifamily occupancy at 92.9%92.5% compared to 94.3%
95.6%


Made significant progress in•Core operating property portfolio occupancy at 94.4% as of December 31, 2020 compared to 96.5% as of December 31, 2019.

•Renewed over 84% of commercial office and retail space under expiring leases during the joint venture development of One City Center, a mixed-use project located in Durham, North Carolina, with delivery scheduled forfourth quarter. Including new leases, the third quarter of 2018. Executed a lease agreement with WeWork, a New York City based co-working space company, that will occupy 62,000Company leased over 222,000 square feet of space, bringing totalcommercial office pre-leasing to approximately 90% for this asset.and retail space.


Made significant progress on the Point Street apartments at Harbor Point in Baltimore, with units scheduled to be delivered in early 2018.

Made significant progress on the Harding Place project in Midtown Charlotte.

Completed construction•Collected 98% of The Residences at Annapolis Junction Town Center, located approximately two miles from Fort Meade.

Topped out on the construction of Phase VI of the Town Center of Virginia Beach, with delivery scheduledportfolio rents for the summerfourth quarter, including 100% of 2018,office tenant rents, 99% of multifamily tenant rents, and announced that Williams Sonoma and Pottery Barn will be the anchor tenants96% of this development.retail tenant rents.


Completed the dispositions of:

The Wawa outparcel at Greentree Shopping Center for $4.6 million at a gain of $3.4 million.

Two office properties leased by the Commonwealth of Virginia for an aggregate sales price of $13.2 million representing a 38% profit over development cost.

A non-operating land outparcel at Sandbridge Commons for $1.0 million at a gain of $0.5 million.

Completed the acquisitions of:

The outparcel phase of Wendover Village in Greensboro, North Carolina for $14.3 million. We previously acquired the primary phase of Wendover Village in January 2016.
Undeveloped land parcels in Charleston, South Carolina for $7.1 million and $7.2 million for the development of the 595 King Street property and the 530 Meeting Street property, respectively.

Began construction on our two student housing projects (595 King Street and 530 Meeting Street) in Charleston, South Carolina.

Invested in the development of an estimated $34.0 million Whole Foods-anchored center located in Decatur, Georgia and invested in the development of a second Whole Foods-anchored center in Delray Beach, Florida through mezzanine lending.

General contracting and real estate services segment gross profit of $7.4 million compared to $5.7 million for the year ended December 31, 2016.

Closed on a new, expanded and unsecured $300 million credit facility that includes a $150 million term loan with Bank of America, N.A. serving as the administrative agent and Regions Bank and PNC Bank, National Association serving as joint lead arrangers and syndication agents.

Completed an underwritten public offering of 6.9 million shares of common stock at a public offering price of $13.00 per share on May 12, 2017, generating net proceeds of $85.3 million.

Raised $6.2 million of net proceeds at a weighted average price of $14.08 per share under our at-the-market continuous equity offering programs.

•Declared cash dividends of $0.76 per share compared to $0.72$0.44 per share for the year ended December 31, 2016.

Subsequent2020 compared to $0.84 per share for the year ended December 31, 2017, we:
◦Entered into a joint venture agreement as a majority partner to develop, build, and own an estimated $23 million Lowes Foods-anchored retail center in Mount Pleasant, South Carolina, increasing our development pipeline to $484 million.
◦Added approximately 132,000 square feet of retail space through the acquisitions of Indian Lakes Crossing, a Harris Teeter-anchored shopping center in Virginia Beach, Virginia, and Parkway Centre, a newly developed Publix-anchored shopping center in Moultrie, Georgia.

2019.

•In August 2020, raised approximately $86.3 million of net proceeds before offering expenses through an underwritten public offering of 3,600,000 shares of the Company's 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock at a public offering price of $24.75 per share (inclusive of accrued dividends).

•Sold a portfolio of seven unencumbered retail assets comprising over 630,000 square feet, or 15% of the Company's retail portfolio, for aggregate proceeds before expenses of $90 million.

•Commenced a new development project, Solis Gainesville, a $52 million 223-unit multifamily project in downtown Gainesville, Georgia.

•Acquired Nexton Square, a 127,000 square foot open air lifestyle center in Summerville, South Carolina in an off-market transaction.

•Acquired the remaining 20% noncontrolling ownership interest in the Southern Post project in Roswell, Georgia resulting in 100% ownership of the partnership.

•Completed the acquisition of the Edison Apartments in downtown Richmond, Virginia in an off-market, OP Unit transaction.
•Completed the off-market acquisition of The Residences at Annapolis Junction, a 416-unit, Class A, LEED Gold certified mid-rise apartment community in Howard County, Maryland.

•Reinstated and amended the Company’s two leases with Regal Cinemas to allow for continued occupancy by Regal Cinemas and to provide for additional density:

◦In Harrisonburg, Virginia, we obtained development rights for conventional apartments and structured parking.

◦At the Virginia Beach Town Center, we obtained the ability to develop significant additional mixed-use commercial space.

•Formed a 50/50 joint venture that will develop and build T. Rowe Price's new 450,000 square foot global headquarters in Baltimore's Harbor Point. T. Rowe Price agreed to a 15-year lease and plans to relocate its downtown Baltimore operations to Harbor Point in the first half of 2024. In conjunction with the build-to-suit project, another joint venture will develop and build a new mixed-use facility with structured parking on a neighboring site to accommodate both existing and T. Rowe Price parking requirements.

•Agreed to invest $23 million of preferred equity in the Solis Nexton development project beginning in early 2021. Solis Nexton will be a new 320-unit Class A apartment community in Summerville, South Carolina located within walking distance of Nexton Square, the 127,000 square foot lifestyle center acquired by the Company in 2020.

•Established a Sustainability Committee to support the Company's ongoing commitment to environmental, workplace health and safety, corporate social responsibility, corporate governance, and other sustainability
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matters. The Sustainability Committee's 2019 Report can be accessed through the Sustainability section of the Company's website.

•Reaffirmed the Company's commitment to best-in-class corporate governance practices by waiving the option to classify the Company's board of directors without stockholder approval under Section 3-802(c) of the Maryland General Corporation Law, commonly referred to as MUTA.

•Adopted several new corporate governance policies related to: environmental matters, human rights, vendor code of business conduct, clawback of incentive compensation, and anti-hedging.

•In February 2021, announced that the Board of Directors has reaffirmed the Company’s commitment to leadership in corporate governance practices by adopting an amendment to the Company’s bylaws to implement a “proxy access” provision.

For definitions and discussion of FFO, Normalized FFO, NOI, and same store NOI, see the sectionssection below entitled “Item 6. Selected Financial Data” and “Item"Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”"
 
Our Competitive Strengths
 
We believe that we distinguish ourselves from other REITs through the following competitive strengths:
 
•High-Quality, Diversified Portfolio. Our portfolio consists of institutional-grade, premier office, retail, and multifamily properties located primarily in Virginia, Maryland, North Carolina, South Carolina, and South Carolina.Georgia. Our properties are generally in the top tier of commercial properties in their markets and offer Class-A amenities and finishes.  


•Seasoned, Committed, and Aligned Senior Management Team with a Proven Track Record. Our senior management team has extensive experience developing, constructing, owning, operating, renovating, and financing institutional-grade office, retail, multifamily, and hotel properties in the Mid-Atlantic and Southeastern regions. As of December 31, 2017,2020, our named executive officers and directors collectively owned approximately 17%13% of our company on a fully diluted basis, which we believe aligns their interests with those of our stockholders. 


•Strategic Focus on Attractive Mid-Atlanticand SoutheasternMarkets. We focus our activities inon our target markets in the Mid-Atlantic and Southeastern regions of the United States that demonstrate attractive fundamentals driven by favorable supply and demand characteristics and limited competition from other large, well-capitalized operators. We believe that our longstanding presence in our target markets provides us with significant advantages in sourcing and executing development opportunities, identifying and mitigating potential risks, and negotiating attractive pricing. 


•Extensive Experience with Construction and Development. Our platform consists of development, construction, and asset management capabilities, which comprise an integrated delivery system for every project that we build for our own account or for third-party clients. This integrated approach provides a single source of accountability for design and construction, simplifies coordination and communication among the relevant stakeholders in each project, and provides us valuable insight from an operational perspective. We believe that being regularly engaged in construction and development projects provides us significant and distinct advantages, including enhanced market intelligence, greater insight into best practices, enhanced operating leverage, and “first look”"first look" access to development and ownership opportunities in our target markets. 
We also use mezzanine lending arrangements, which may enable us to acquire completed development projects at prices that are below market or at cost and may enable us to realize profit on projects we do not intend to own.


•Longstanding Public and Private Relationships. We have extensive experience with public/private real estate development projects dating back to 1984, having worked with the Commonwealth of Virginia, the State of Georgia, and the Kingdom of Sweden, as well as various municipalities. Through our experience and longstanding relationships with governmental entities such as these, we have learned to successfully navigate the often complex and time-consuming government approval process, which has given us the ability to capture opportunities that we believe many of our competitors are unable to pursue. 
 

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Our Business and Growth Strategies
 
Our primary business objectives are to: (i) continue to develop, build, and own institutional-grade office, retail, and multifamily properties in our target markets, (ii) finance and operate our portfolio in a manner that increases cash flow and property values, (iii) execute new third-party construction work with consistent operating margins, and (iv) pursue selective acquisition opportunities, particularly when the acquisition involves a significant redevelopment aspect. We will seek to achieve our objectives through the following strategies: 


•Pursue a Disciplined, Opportunistic Development and Acquisition Strategy Focused on Office, Retail, and Multifamily Properties. We intend to continue to grow our asset base through continued strategic development of office, retail, and multifamily properties, and the selective acquisition of high-quality properties that are well-located in their submarkets. Furthermore, we believe our construction and development expertise provides a high level of quality control while ensuring that the projects we construct and develop are completed more quickly and at a lower cost than if we engaged a third-party general contractor.


•Pursue New, and Expand Existing, Public/Private Relationships. We intend to continue to leverage our extensive experience in completing large, complex, mixed-use, public/private projects to establish relationships with new public partners while expanding our relationships with existing public partners.


•Leverage our Construction and Development Platform to Attract Additional Third-Party Clients. We believe that we have a unique advantage over many of our competitors due to our integrated construction and development business that provides expertise, oversight, and a broad array of client-focused services. We intend to continue to conduct and grow our construction business and other third-party services by pursuing new clients and expanding our relationships with existing clients.
We also intend to continue to use our mezzanine lending program to leverage our development and construction expertise in serving clients.


•Engage in Disciplined Capital Recycling. We intend to opportunistically divest properties when we believe returns have been maximized and to redeploy the capital into new development, acquisition, repositioning, or redevelopment projects that are expected to generate higher potential risk-adjusted returns.
4

Table of Contents

Our Properties
 
    The table below sets forth certain information regarding our stabilized portfolio as of December 31, 2020. We generally consider a property to be stabilized upon the earlier of: (i) the quarter after the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy. Additionally, any property that is fully or partially taken out of service for the purpose of redevelopment is no longer considered stabilized until the redevelopment activities are complete, the asset is placed back into service, and the stabilization criteria above are again met.
PropertyLocation  Year Built Ownership Interest
Net Rentable Square Feet(1)
Occupancy(2)
ABR(3)
ABR per Leased SF(3)
Retail Properties      
249 Central Park RetailVirginia Beach, VA2004100 %92,400 97.9 %$2,382,569 $26.34 
Apex EntertainmentVirginia Beach, VA2002100 %103,335 100.0 %1,482,137 14.34 
Broad Creek Shopping Center(4)(5)
Norfolk, VA1997/2001100 %121,504 95.1 %2,075,499 17.97 
Broadmoor PlazaSouth Bend, IN1980100 %115,059 97.5 %1,329,203 11.84 
Brooks Crossing Retail (6)
Newport News, VA201665 %18,349 66.3 %170,112 13.98 
Columbus Village(4)
Virginia Beach, VA1980/2013100 %62,362 91.0 %1,719,906 30.30 
Columbus Village II (7)
Virginia Beach, VA1995/1996100 %92,061 96.7 %720,000 8.09 
Commerce Street Retail(8)
Virginia Beach, VA2008100 %19,173 100.0 %888,913 46.36 
Courthouse 7-ElevenVirginia Beach, VA2011100 %3,177 100.0 %139,311 43.85 
Dimmock SquareColonial Heights, VA1998100 %106,166 75.3 %1,465,285 18.34 
Fountain Plaza RetailVirginia Beach, VA2004100 %35,961 100.0 %998,614 27.77 
Greentree Shopping CenterChesapeake, VA2014100 %15,719 92.6 %328,536 22.57 
Hanbury Village(4)
Chesapeake, VA2006/2009100 %101,815 100.0 %2,123,044 20.85 
Harrisonburg RegalHarrisonburg, VA1999100 %49,000 100.0 %717,850 14.65 
Lexington SquareLexington, SC2017100 %85,440 98.3 %1,822,429 21.69 
Market at Mill Creek(4)(6)
Mount Pleasant, SC201870 %80,319 97.7 %1,811,315 23.07 
Marketplace at Hilltop(4)(5)
Virginia Beach, VA2000/2001100 %116,953 95.0 %2,435,974 21.92 
Nexton SquareSummerville, SC2020100 %127,196 87.7 %2,900,471 26.01 
North Hampton MarketTaylors, SC2004100 %114,954 97.7 %1,471,074 13.09 
North Point Center(4)
Durham, NC1998/2009100 %494,746 99.1 %3,672,862 7.49 
Oakland Marketplace(4)
Oakland, TN2004100 %64,538 100.0 %473,268 7.33 
Parkway CentreMoultrie, GA2017100 %61,200 100.0 %833,832 13.62 
Parkway MarketplaceVirginia Beach, VA1998100 %37,804 87.3 %674,458 20.44 
Patterson PlaceDurham, NC2004100 %160,942 81.3 %2,114,958 16.17 
Perry Hall MarketplacePerry Hall, MD2001100 %74,256 100.0 %1,280,535 17.24 
Providence PlazaCharlotte, NC2007/2008100 %103,118 91.6 %2,674,198 28.31 
Red Mill Commons(4)
Virginia Beach, VA2000-2005100 %373,808 92.0 %6,275,721 18.26 
Sandbridge Commons(4)
Virginia Beach, VA2015100 %76,650 100.0 %1,097,184 14.31 
Socastee CommonsMyrtle Beach, SC2000/2014100 %57,273 100.0 %653,915 11.42 
South RetailVirginia Beach, VA2002100 %38,515 100.0 %999,534 25.95 
South SquareDurham, NC1977/2005100 %109,590 98.1 %1,875,689 17.45 
Southgate SquareColonial Heights, VA1991/2016100 %260,131 95.1 %3,443,093 13.92 
Southshore ShopsChesterfield, VA2006100 %40,307 74.1 %624,085 20.89 
Studio 56 RetailVirginia Beach, VA2007100 %11,594 15.2 %54,182 30.75 
Tyre Neck Harris Teeter(4)(5)
Portsmouth, VA2011100 %48,859 100.0 %533,285 10.91 
Wendover VillageGreensboro, NC2004100 %176,939 99.4 %3,415,200 19.42 
Total / Weighted Average  3,651,213 94.7 %$57,678,241 $16.69 
5
Table of Contents
Location  Year Built Ownership Interest
Net Rentable Square Feet (1)
Occupancy (2)
ABR (3)
ABR per Leased SF(3)
Office Properties
4525 Main StreetVirginia Beach, VA2014100 %234,938 99.4 %$6,941,742 $29.73 
Armada Hoffler Tower(8)(9)
Virginia Beach, VA2002100 %320,680 95.9 %8,983,921 29.23 
Brooks Crossing Office(6)
Newport News, VA2019100 %98,061 100.0 %1,850,411 18.87 
One City CenterDurham, NC2019100 %151,599 89.3 %4,242,798 31.33 
One Columbus(8)
Virginia Beach, VA1984100 %128,770 98.9 %3,249,143 25.52 
Thames Street Wharf(9)
Baltimore, Maryland2010100 %263,426 99.4 %7,250,291 27.70 
Two ColumbusVirginia Beach, VA2009100 %108,459 95.4 %2,576,166 24.89 
Total / Weighted Average  1,305,933 97.0 %$35,094,472 $27.70 
LocationYear BuiltOwnership InterestUnits/Beds
Occupancy(2)
AQR(9)
Monthly Rent per Occupied Unit/Bed(11)
Multifamily Properties
1405 Point(5)(12)
Baltimore, MD2018100 %289 95.5 %$7,047,293 $2,128 
Edison Apartments(12)
Richmond, VA1919/2014100 %174 94.3 %2,590,681 1,316 
Encore ApartmentsVirginia Beach, VA2014100 %286 95.8 %4,766,247 1,450 
Greenside ApartmentsCharlotte, NC2018100 %225 96.0 %4,351,885 1,679 
Hoffler Place(12)
Charleston, SC201993 %258 98.1 %3,281,542 1,081 
Johns Hopkins Village(5)(12)(13)
Baltimore, MD2016100 %568 72.9 %6,683,068 1,345 
Liberty Apartments(12)
Newport News, VA2013100 %197 94.2 %3,036,195 1,363 
Premier ApartmentsVirginia Beach, VA2018100 %131 96.9 %2,529,100 1,660 
Smith’s Landing(5)
Blacksburg, VA2009100 %284 98.9 %4,839,715 1,435 
Summit PlaceCharleston, SC202090 %357 96.9 %3,624,274 873 
The Cosmopolitan(12)
Virginia Beach, VA2006100 %342 96.2 %7,012,966 1,776 
The Residences at Annapolis JunctionAnnapolis Junction, MD201879 %416 95.2 %9,216,495 1,939 
Total / Weighted Average3,527 92.5 %$58,979,461 $1,507 

(1)The net rentable square footage for each of our office and retail properties is the sum of (a) the square footage of existing leases, plus (b) for available space, management’s estimate of net rentable square footage based, in part, on past leases. The net rentable square footage included in office leases is generally consistent with the Building Owners and Managers Association 1996 measurement guidelines.
(2)Occupancy for each of our office and retail properties is calculated as (a) square footage under executed leases as of December 31, 2020 divided by (b) net rentable square feet, expressed as a percentage. Occupancy for our multifamily properties is calculated as (a) total units occupied as of December 31, 2020 divided by (b) total units available, expressed as a percentage.
(3)For the properties in our office and retail portfolios, annualized base rent ("ABR") is calculated by multiplying (a) monthly base rent (defined as cash base rent, before contractual tenant concessions and abatements, and excluding tenant reimbursements for expenses paid by us) as of December 31, 2020 for in-place leases as of such date by (b) 12, and does not give effect to periodic contractual rent increases or contingent rental revenue (e.g., percentage rent based on tenant sales thresholds). ABR per leased square foot is calculated by dividing (a) ABR by (b) square footage under in-place leases as of December 31, 2020. In the case of triple net or modified gross leases, our calculation of ABR does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses.

6
Table of Contents
(4)Net rentable square feet at certain of our retail properties includes pad sites leased pursuant to the ground leases in the table below:
Properties Subject to Ground LeaseNumber of Ground LeasesSquare Footage
Leased Pursuant to
Ground Leases		ABR
Broad Creek Shopping Center623,825$660,200 
Columbus Village13,403200,000 
Hanbury Village255,5861,082,118 
Market at Mill Creek17,01463,000 
Marketplace at Hilltop14,211149,996 
North Point Center4280,5561,169,778 
Oakland Marketplace145,000186,347 
Red Mill Commons833,961780,538 
Sandbridge Commons360,521738,500 
Tyre Neck Harris Teeter148,859533,285 
Total / Weighted Average28562,936$5,563,762 

(5)We lease the land underlying this property pursuant to a ground lease.
(6)We are entitled to a preferred return on our investment in this property.
(7)The Regal Cinemas space is shown as occupied in this data. This lease was terminated in October 2020 and was reinstated in January 2021.
(8)Includes ABR pursuant to a rooftop lease.
(9)As of December 31, 2017,2020, we occupied 55,390 square feet at these two properties at an ABR of $1.8 million, or $32.99 per leased square foot, which amounts are reflected in this table. The rent paid by us is eliminated in accordance with U.S. generally accepted accounting principles ("GAAP").
(10)For the properties in our operatingmultifamily portfolio, AQR is calculated by multiplying (a) revenue for the quarter ended December 31, 2020 by (b) 4.
(11)Monthly rent per occupied unit/bed is calculated by dividing total base rental payments for the month ended December 31, 2020 by the number of occupied units (or, in the case of Johns Hopkins Village, Hoffler Place, and Summit Place, occupied beds of the 568, 258, and 357 total beds, respectively) as of December 31, 2020.
(12)The AQR for Liberty, Cosmopolitan, John Hopkins Village, Hoffler Place, Edison Apartments, and 1405 Point excludes approximately $0.3 million, $0.7 million, $1.1 million, $0.1 million, $0.3 million, and $0.4 million, respectively from ground floor retail leases.
(13)Student Housing property portfolio comprisedthat is leased by bed. Monthly effective rent per occupied unit is calculated by dividing total base rental payments for the following:   month ended December 31, 2020 by the number of occupied beds.



7
      Ownership Net Rentable     ABR per
Property 
Location  
 
Year Built 
 Interest 
Square Feet(1)  
 
Occupancy(2)  
 
ABR(3)  
 
Leased SF(3)  
Office Properties              
4525 Main Street Virginia Beach, VA 2014 100% 237,893
 93.1% $6,246,029
 $28.21
Armada Hoffler Tower(4)(5)
 Virginia Beach, VA 2002 100% 324,242
 91.9
 8,604,490
 28.89
One Columbus Virginia Beach, VA 1984 100% 129,272
 85.7
 2,784,294
 25.14
Two Columbus Virginia Beach, VA 2009 100% 108,467
 82.5
 2,380,130
 26.61
Total / Weighted Average       799,874
 89.9% $20,014,944
 $27.82
Retail Properties              
249 Central Park Retail(5)
 Virginia Beach, VA 2004 100% 92,710
 96.6% $2,525,113
 $28.19
Alexander Pointe Salisbury, NC 1997 100% 57,710
 97.6
 653,513
 11.61
Bermuda Crossroads(6)
 Chester, VA 2001 100% 122,566
 92.4
 1,656,942
 14.63
Broad Creek Shopping Center(6)
 Norfolk, VA 1997/2001 100% 250,416
 100.0
 3,858,878
 15.41
Broadmoor Plaza South Bend, IN 1980 100% 115,059
 92.2
 1,251,946
 11.81
Brooks Crossing(7)
 Newport News, VA 2016 65% 18,349
 59.8
 151,380
 13.80
Columbus Village Virginia Beach, VA 1980/2013 100% 66,594
 88.5
 1,145,259
 19.42
Columbus Village II Virginia Beach, VA 1995/1996 100% 92,061
 100.0
 1,652,246
 17.95
Commerce Street Retail(5)
 Virginia Beach, VA 2008 100% 19,173
 100.0
 856,862
 44.69
Courthouse 7-Eleven Virginia Beach, VA 2011 100% 3,177
 100.0
 139,280
 43.84
Dick’s at Town Center Virginia Beach, VA 2002 100% 103,335
 100.0
 1,241,201
 12.01
Dimmock Square Colonial Heights, VA 1998 100% 106,166
 97.2
 1,749,019
 16.95
Fountain Plaza Retail Virginia Beach, VA 2004 100% 35,961
 100.0
 1,022,080
 28.42
Gainsborough Square Chesapeake, VA 1999 100% 88,862
 92.5
 1,242,046
 15.12
Greentree Shopping Center Chesapeake, VA 2014 100% 15,719
 92.6
 318,839
 21.90
Hanbury Village(6)
 Chesapeake, VA 2006/2009 100% 116,635
 97.0
 2,422,431
 21.40
Harper Hill Commons(6)
 Winston-Salem, NC 2004 100% 96,914
 80.5
 894,989
 11.47
Harrisonburg Regal Harrisonburg, VA 1999 100% 49,000
 100.0
 683,550
 13.95
Lightfoot Marketplace(6)(7)
 Williamsburg, VA 2016 70% 107,643
 77.4
 1,247,430
 14.97
North Hampton Market Taylors, SC 2004 100% 114,935
 99.0
 1,436,099
 12.63
North Point Center(6)
 Durham, NC 1998/2009 100% 496,246
 99.3
 3,706,247
 7.52
Oakland Marketplace(6)
 Oakland, TN 2004 100% 64,600
 97.8
 455,044
 7.20
Parkway Marketplace Virginia Beach, VA 1998 100% 37,804
 100.0
 759,992
 20.10
Patterson Place Durham, NC 2004 100% 160,942
 96.1
 2,428,883
 15.70
Perry Hall Marketplace Perry Hall, MD 2001 100% 74,256
 100.0
 1,252,232
 16.86
Providence Plaza Charlotte, NC 2007/2008 100% 103,118
 96.3
 2,647,044
 26.34
Renaissance Square Davidson, NC 2008 100% 80,467
 88.0
 1,219,477
 17.22
Sandbridge Commons(6)
 Virginia Beach, VA 2015 100% 71,417
 100.0
 1,005,441
 14.08
Socastee Commons Myrtle Beach, SC 2000/2014 100% 57,273
 100.0
 656,700
 11.47
Southgate Square Colonial Heights, VA 1991/2016 100% 220,131
 92.1
 2,764,187
 13.64
Southshore Shops Midlothian, VA 2006 100% 40,333
 93.2
 761,254
 20.24
South Retail Virginia Beach, VA 2002 100% 38,515
 100.0
 947,752
 24.61
South Square(6)
 Durham, NC 1977/2005 100% 109,590
 100.0
 1,898,676
 17.33
Stone House Square(6)
 Hagerstown, MD 2008 100% 112,274
 90.7
 1,744,377
 17.13
Studio 56 Retail Virginia Beach, VA 2007 100% 11,594
 100.0
 378,009
 32.60
Tyre Neck Harris Teeter(6)
 Portsmouth, VA 2011 100% 48,859
 100.0
 533,052
 10.91
Waynesboro Commons Waynesboro, VA 1993 100% 52,415
 100.0
 428,996
 8.18
Wendover Village Greensboro, NC 2004 100% 171,653
 99.2
 3,060,233
 17.96
Total / Weighted Average       3,624,472
 96.5%
(8) 
$52,796,699
 $15.21


Table of Contents
        Ownership       Monthly Rent per
 Location Year Built Interest Units 
Occupancy(2)
 
ABR(9)
 
Occupied Unit/Bed(10)
Multifamily Properties           
  
Encore ApartmentsVirginia Beach, VA 2014 100% 286
 91.6% $4,053,588
 $1,289.31
Johns Hopkins Village(11)(12)
Baltimore, MD 2016 100% 157
 100.0
 6,750,624
 990.41
Liberty Apartments(11)
Newport News, VA 2013 100% 197
 86.0
 2,131,668
 1,048.51
Smith’s Landing(12)
Blacksburg, VA 2009 100% 284
 98.6
 3,821,856
 1,137.46
The Cosmopolitan(11)
Virginia Beach, VA 2006 100% 342
 90.1
 5,541,936
 1,499.44
Total / Weighted Average      1,266
 92.9% $22,299,672
 $1,233.61

(1)The net rentable square footage for each of our office and retail properties is the sum of (a) the square footage of existing leases, plus (b) for available space, management’s estimate of net rentable square footage based, in part, on past leases. The net rentable square footage included in office leases is generally consistent with the Building Owners and Managers Association 1996 measurement guidelines.
(2)Occupancy for each of our office and retail properties is calculated as (a) square footage under executed leases as of December 31, 2017 divided by (b) net rentable square feet, expressed as a percentage. Occupancy for our multifamily properties is calculated as (a) total units occupied as of December 31, 2017 divided by (b) total units available, expressed as a percentage.
(3)For the properties in our office and retail portfolios, annualized base rent ("ABR") is calculated by multiplying (a) monthly base rent (defined as cash base rent, before contractual tenant concessions and abatements, and excluding tenant reimbursements for expenses paid by us) as of December 31, 2017 for in-place leases as of such date by (b) 12, and does not give effect to periodic contractual rent increases or contingent rental revenue (e.g., percentage rent based on tenant sales thresholds). ABR per leased square foot is calculated by dividing (a) ABR by (b) square footage under in-place leases as of December 31, 2017. In the case of triple net or modified gross leases, our calculation of ABR does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses.
(4)As of December 31, 2017, we occupied 41,103 square feet at these two properties at an ABR of $1.2 million, or $30.31 per leased square foot, which amounts are reflected in this table. The rent paid by us is eliminated in accordance with U.S. generally accepted accounting principles ("GAAP").
(5)Includes ABR pursuant to a rooftop lease.
(6)Net rentable square feet at certain of our retail properties includes pad sites leased pursuant to the ground leases in the table below:
    Square Footage  
  Number of Leased Pursuant to  
Properties Subject to Ground Lease Ground Leases Ground Leases ABR
Bermuda Crossroads 2 11,000 $170,610
Broad Creek Shopping Center 6 22,737 621,601
Hanbury Village 2 55,586 1,082,118
Harper Hill Commons 1 41,520 373,680
Lightfoot Marketplace 1 51,750 543,375
North Point Center 4 280,556 1,131,953
Oakland Marketplace 1 45,000 186,300
Sandbridge Commons 2 55,288 675,467
South Square 1 1,778 60,000
Stone House Square 1 3,650 165,000
Tyre Neck Harris Teeter 1 48,859 533,052
Total / Weighted Average 22 617,724 $5,543,156

(7)We are entitled to a preferred return of 8% and 9% on our investment in Brooks Crossing and Lightfoot Marketplace, respectively. These properties were not stabilized as of December 31, 2017. See "Development Pipeline" below for our definition of stabilized.
(8)Weighted average occupancy includes only stabilized properties. See "Development Pipeline" below for our definition of stabilized.

(9)For the properties in our multifamily portfolio, ABR is calculated by multiplying (a) base rental payments for the month ended December 31, 2017 by (b) 12.
(10)Monthly rent per occupied unit/bed is calculated by dividing total base rental payments for the month ended December 31, 2017 by the number of occupied units (or, in the case of Johns Hopkins Village, occupied beds) as of December 31, 2017.
(11)The ABR for Liberty, Cosmopolitan, and John Hopkins Village excludes $244,000, $716,000, and $1.2 million from ground floor retail leases, respectively.
(12)We lease the land underlying this property pursuant to a ground lease.

Lease Expirations


The following tables summarize the scheduled expirations of leases in our office and retail operating property portfolios as of December 31, 2017.2020. The information in the following tables does not assume the exercise of any renewal options.options:  
 
Office Lease Expirations
Year of Lease ExpirationNumber of Leases ExpiringSquare Footage of Leases Expiring% Portfolio Net Rentable Square FeetAnnualized Base Rent% of Office Portfolio Annualized Base RentAnnualized Base Rent per Leased Square Foot
Available— 39,025 3.0 %$— — %$— 
Month-to-Month3 — — %3,600 — %— 
2020 (1)
1 3,024 0.2 %70,217 0.2 %23.22 
202113 23,202 1.8 %739,615 2.1 %31.88 
20229 47,077 3.6 %1,286,956 3.7 %27.34 
202312 100,095 7.7 %2,670,834 7.6 %26.68 
202411 140,377 10.7 %3,475,309 9.9 %24.76 
202518 142,117 10.9 %4,197,927 12.0 %29.54 
202610 69,204 5.3 %1,769,764 5.0 %25.57 
20276 256,477 19.6 %7,395,640 21.1 %28.84 
20288 71,410 5.5 %2,065,401 5.9 %28.92 
20297 242,709 18.6 %6,265,518 17.9 %25.81 
20306 107,801 8.3 %3,050,777 8.7 %28.30 
Thereafter2 63,415 4.8 %2,102,914 5.9 %33.16 
Total / Weighted Average106 1,305,933 100.0 %$35,094,472 100.0 %$27.70 

(1) Leases expired on 12/31/2020. 
    Square     % of Office  
  Number of Footage of % Portfolio   Portfolio Annualized Base
  Leases Leases Net Rentable Annualized Annualized Rent per Leased
Year of Lease Expiration Expiring Expiring Square Feet Base Rent Base Rent Square Foot
     Available —
 80,388
 10.1% $—
 —% $—
Month-to-Month 3
 633
 0.1
 20,400
 0.1
 32.23
2018 11
 39,734
 5.0
 1,276,658
 6.4
 32.13
2019 14
 84,418
 10.6
 2,104,581
 10.5
 24.93
2020 7
 26,537
 3.3
 742,047
 3.7
 27.96
2021 8
 46,798
 5.8
 1,310,134
 6.5
 28.00
2022 9
 73,800
 9.2
 2,059,496
 10.3
 27.91
2023 7
 67,132
 8.4
 1,737,304
 8.7
 25.88
2024 4
 70,617
 8.8
 2,063,738
 10.3
 29.22
2025 6
 66,487
 8.3
 1,883,863
 9.4
 28.33
2026 3
 15,140
 1.9
 329,509
 1.7
 21.76
2027 3
 49,081
 6.1
 1,395,538
 7.0
 28.43
2028 1
 22,950
 2.9
 642,600
 3.2
 28.00
Thereafter 3
 156,140
 19.5
 4,449,076
 22.2
 28.49
Total / Weighted Average 79
 799,855
 100.0% $20,014,944
 100.0% $27.82


Retail Lease Expirations
Year of Lease ExpirationNumber of Leases ExpiringSquare Footage of Leases Expiring% Portfolio Net Rentable Square FeetAnnualized Base Rent% of Retail Portfolio Annualized Base RentAnnualized Base Rent per Leased Square Foot
Available— 194,714 5.3 %$— — %$— 
Month-to-Month1 1,400 — %25,550 — %18.25 
2020 (1)
3 9,399 0.3 %144,030 0.2 %15.32 
202156 311,097 8.5 %3,981,597 6.9 %12.80 
202272 331,321 9.1 %5,470,947 9.5 %16.51 
202362 419,890 11.5 %6,698,570 11.6 %15.95 
202480 383,309 10.5 %7,168,907 12.4 %18.70 
202588 611,257 16.7 %8,496,725 14.7 %13.90 
202646 282,977 7.8 %5,538,232 9.6 %19.57 
202727 162,602 4.5 %3,400,198 5.9 %20.91 
202821 95,105 2.6 %1,600,359 2.8 %16.83 
202924 104,871 2.9 %2,198,752 3.8 %20.97 
203026 197,820 5.4 %3,827,482 6.6 %19.35 
Thereafter31 545,451 14.9 %9,126,892 16.0 %16.73 
Total / Weighted Average537 3,651,213 100.0 %$57,678,241 100.0 %$16.69 

(1) Leases expired on 12/31/2020. 
8
    Square     % of Retail  
  Number of Footage of % Portfolio   Portfolio Annualized Base
  Leases Leases Net Rentable Annualized Annualized Rent per Leased
Year of Lease Expiration Expiring Expiring Square Feet Base Rent Base Rent Square Foot
Available —
 153,263
 4.2% $—
 —% $—
Month-to-Month 4
 4,728
 0.1
 68,990
 0.1
 14.59
2018 60
 183,508
 5.1
 3,425,837
 6.5
 18.67
2019 87
 588,052
 16.2
 9,211,040
 17.4
 15.66
2020 73
 575,303
 15.9
 8,012,634
 15.2
 13.93
2021 56
 283,832
 7.8
 5,116,496
 9.7
 18.03
2022 51
 409,682
 11.3
 6,591,039
 12.5
 16.09
2023 27
 346,372
 9.6
 4,626,776
 8.8
 13.36
2024 18
 168,018
 4.7
 2,667,454
 5.1
 15.88
2025 17
 226,427
 6.2
 2,404,463
 4.6
 10.62
2026 19
 166,665
 4.6
 2,882,771
 5.5
 17.30
2027 14
 105,286
 2.9
 2,283,629
 4.3
 21.69
2028 8
 171,136
 4.7
 2,038,095
 3.9
 11.91
Thereafter 11
 242,200
 6.7
 3,467,475
 6.4
 14.32
Total / Weighted Average 445
 3,624,472
 100.0% $52,796,699
 100.0% $15.21
Table of Contents

Tenant Diversification
 
The following tables list the 10 largest tenants in each of our office and retail operating property portfolios, based on annualized base rent as of December 31, 20172020 ($ in thousands):  
   % of % of
   Office Total
   Portfolio Portfolio
 Annualized Annualized Annualized
Office Tenant
 
Base Rent  
 
Base Rent 
 
Base Rent 
Office Tenant Annualized Base Rent  % of
Office
Portfolio
Annualized
Base Rent 		% of
Total
Portfolio
Annualized
Base Rent 
Morgan StanleyMorgan Stanley$5,879 15.5 %3.8 %
Clark Nexsen $2,537
 12.7% 2.7%Clark Nexsen2,692 7.1 %1.7 %
Hampton University 1,054
 5.3
 1.1
WeWorkWeWork2,065 5.5 %1.3 %
Duke UniversityDuke University1,579 4.2 %1.0 %
Huntington Ingalls IndustriesHuntington Ingalls Industries1,544 4.1 %1.0 %
Mythics 1,052
 5.3
 1.1
Mythics1,211 3.2 %0.8 %
John Hopkins MedicineJohn Hopkins Medicine1,149 3.0 %0.7 %
Pender & Coward 860
 4.3
 0.9
Pender & Coward926 2.4 %0.6 %
Kimley-Horn 859
 4.3
 0.9
Kimley-Horn912 2.4 %0.6 %
Troutman Sanders 838
 4.2
 0.9
Troutman Sanders889 2.4 %0.6 %
The Art Institute 835
 4.2
 0.9
City of Virginia Beach Development Authority 722
 3.6
 0.8
Cherry Bekaert 708
 3.5
 0.7
Williams Mullen 643
 3.2
 0.7
Top 10 Total $10,108
 50.6% 10.7%Top 10 Total$18,846 49.8 %12.1 %
 

Retail Tenant (1)
Annualized Base Rent% of
Retail
Portfolio
Annualized
Base Rent		% of
Total
Portfolio
Annualized
Base Rent
Harris Teeter/Kroger$3,289 5.6 %2.1 %
Lowes Foods1,976 3.4 %1.3 %
PetSmart1,461 2.5 %0.9 %
Apex Entertainment1,050 1.8 %0.7 %
Bed Bath & Beyond1,047 1.8 %0.7 %
Petco913 1.6 %0.6 %
Total Wine & More765 1.3 %0.5 %
Ross Dress for Less762 1.3 %0.5 %
T.J. Maxx/HomeGoods748 1.3 %0.5 %
Safeway718 1.2 %0.5 %
Top 10 Total$12,729 21.8 %8.3 %

(1) Tenants with known terminations have been removed.
    % of % of
    Retail Total
    Portfolio Portfolio
  Annualized Annualized Annualized
Retail Tenant Base Rent Base Rent Base Rent
Kroger/Harris Teeter $5,831
 11.0% 6.1%
Home Depot 2,237
 4.2
 2.4
Regal Cinemas 1,679
 3.2
 1.8
Bed, Bath, & Beyond 1,677
 3.2
 1.8
PetSmart 1,438
 2.7
 1.5
Food Lion 1,291
 2.4
 1.4
Dick's Sporting Goods 840
 1.6
 0.9
Safeway 821
 1.6
 0.9
Weis Markets 802
 1.5
 0.8
Ross Dress for Less 762
 1.4
 0.8
Top 10 Total $17,378
 32.8% 18.4%


Development Pipeline
 
In addition to the properties in our operating property portfolio as of December 31, 2017,2020, we had the following properties in various stages of development, redevelopment, and stabilization. We generally consider a property to be stabilized when itupon the earlier of: (i) the quarter after the property reaches 80% occupancy or thirteen quarters(ii) the thirteenth quarter after the property receives its certificate of occupancy.  
Development, Not Delivered ($ in '000s)
Schedule (1)
  
  EstimatedEstimated Incurred  InitialStabilizedAHH    
PropertyLocation 
Size (1) 
Cost (1) 
CostStartOccupancy
Operation (2)
Ownership %Property Type
Solis GainesvilleGainesville, GA223 units$52,000 $12,000 3Q202Q223Q2395 %Multifamily
Total Development, Pending Delivery$52,000 $12,000      
9
Pending Delivery     ($ in '000s) 
Schedule(1)
    
              Stabilized    
    Estimated Estimated  Incurred    Initial Operation AHH     
Property Location  
Size(1) 
 
Cost(1) 
 Cost Start Occupancy (2) Ownership % Property Type
Town Center Phase VI Virginia Beach, VA 39,000 sf
131 Units		 $43,000
 $22,000
 4Q16 3Q18 3Q19 100 % Mixed-use
Harding Place Charlotte, NC 225 units 47,000
 29,000
 3Q16 3Q18 1Q20 
80 % (3)
 Multifamily
595 King Street Charleston, SC 74 units 48,000
 13,000
 3Q17 3Q19 3Q19 92.5 % Multifamily
530 Meeting Street Charleston, SC 114 units 53,000
 13,000
 3Q17 3Q19 3Q19 90 % Multifamily
Brooks Crossing Newport News, VA 100,000 sf 22,000
 1,000
 1Q18 1Q19 2Q19 
65 % (3)
 Office
Total Development, Pending Delivery $213,000
 $78,000
          
Delivered Not Stabilized     ($ in '000s) Schedule    
              Stabilized    
    Estimated Estimated  Incurred    Initial Operation AHH  
Property Location 
Size(1) 
 
Cost(1) 
 Cost  Start  Occupancy (1)(2) Ownership % Property Type
Brooks Crossing Newport News, VA 18,349 sf $3,000
 $3,000
 3Q15 3Q16 4Q18 
65% (3)
 Retail
Lightfoot Marketplace Williamsburg, VA 107,643 sf 25,000
 23,000
 3Q14 3Q16 2Q18 
70% (3)
 Retail
Total Development, Delivered Not Stabilized 28,000
 26,000
          
Total     $241,000
 $104,000
          
Development/Redevelopment, Delivered Not Stabilized ($ in '000s)Schedule  
  EstimatedEstimated Incurred  InitialStabilizedAHH 
PropertyLocation
Size (1) 
Cost (1) 
Cost Start Occupancy
Operation (1)(2)
Ownership %Property Type
Premier RetailVirginia Beach, VA39,000 sf$18,000 $16,000 4Q163Q184Q21100%Retail
Wills WharfBaltimore, MD327,000 sf120,000 108,000 3Q182Q202Q22100%Office
Total Development/Redevelopment, Delivered Not Stabilized138,000 124,000 
 Total$190,000 $136,000      

(1)Represents estimates that may change as the development/stabilization process proceeds.
(2)Estimated first full quarter of stabilized operations.
(3)We are entitled to a preferred return on our equity prior to any distributions to minority partners.
(1)Represents estimates that may change as the development/stabilization process proceeds.
(2)Estimated first full quarter of stabilized operations. Estimates are inherently uncertain, and we can provide no assurance that our assumptions regarding the timing of stabilization will prove accurate.
 
Our execution on all of the projects identified in the preceding tabletables are subject to, among other factors, regulatory approvals, financing availability, and suitable market conditions.


    Solis Gainesville is a $52.0 million 223-unit Class A multifamily property being developed in Gainesville, Georgia with expected delivery in 2022.
Town Center Phase VI
    Premier Retail is the nextretail portion of the most recent phase of development in the Town Center of Virginia Beach, a $43.0 million mixed-use project expected to include 39,000 square feet of retail space, which is 47% pre-leased as of the date of this report, and 131 luxury apartments, as part of our ongoing public-private partnership with the City of Virginia Beach. This projectPremier Retail is expected to be delivered in the third quarterpart of 2018.

Harding Place is a $47.0 million Class A multifamily property being developed in Midtown Charlotte, North Carolina with expected delivery in 2018.
595 King Street is a $48.0 million student housing property being developed in Charleston, South Carolina with expected delivery in 2019.

530 Meeting Street is a $53.0 million student housing property being developed in Charleston, South Carolina with expected delivery in 2019.

Brooks Crossing is our public-private partnership with the City of Newport News, Virginia designed to revitalize the east end of the city. Themixed-use project that includes 18,00039,000 square feet of retail space, which was 75.6% leased, and 131 luxury apartments, which were 96.9% leased, in each case as of December 31, 2020.

Wills Wharfis leaseda mixed-use development project in the Harbor Point area of Baltimore, Maryland. The project includes office space occupied primarily by various small retailers.Jellyfish and Bright Horizons and also includes a lease to the operator of a Canopy by Hilton hotel. Portions of the Wills Wharf project were completed and placed in service during the second quarter of 2020, with the remainder expected in 2021. As of December 31, 2017,2020, the overall project was 60%47.2% leased.  Additionally, we have agreed to develop, build and own a 100,000 square foot office tower anchored by Newport News Shipbuilding, a division of Huntington Ingalls Industries (NYSE:HII), as part of Brooks Crossing. As of December 31, 2017, the office tower was approximately 80% leased.


Lightfoot Marketplace is a grocery-anchored shopping center in Williamsburg, Virginia. Harris Teeter has signed a 20-year ground lease for a new 53,000 square foot store. Lightfoot Marketplace also includes an additional 34,000 square feet of shops and restaurants as well as a 22,000 square foot build-to-suit building for Children’s Hospital of the King’s Daughters.   As of December 31, 2017, the project was approximately 77% leased.
Other Investments

Point Street Apartments
    Delray Plaza
On October 15, 2015, we agreed to invest up to $28.2 million in the Point Street Apartments project in the Harbor Point area of Baltimore, Maryland. Point Street Apartments is an estimated $98.0 million development project with plans for a 17-story building comprised of 289 residential units and 18,000 square feet of street-level retail space. Beatty Development Group (“BDG”) is the developer of the project and has engaged us to serve as construction general contractor. Point Street Apartments is scheduled to open in the first quarter of 2018; however, we can provide no assurances that Point Street Apartments will open on the anticipated timeline or be completed at the anticipated cost.
    
BDG secured a senior construction loan of up to $67.0 million to fund the development and construction of Point Street Apartments on November 10, 2016. We have agreed to guarantee $25.0 million of the senior construction loan in exchange for the option to purchase up to an 88% controlling interest in Point Street Apartments upon completion of the project as follows: (i) an option to purchase a 79% indirect interest in Point Street Apartments for $27.3 million, exercisable within one year from the project’s completion (the “First Option”) and (ii) provided that we have exercised the First Option, an option to purchase an additional 9% indirect interest in Point Street Apartments for $3.1 million, exercisable within 27 months from the project’s completion (the “Second Option”). We currently have a $2.1 million letter of credit for the guarantee of the senior construction loan.
Our investment in the Point Street Apartments project is in the form of a loan under which BDG may borrow up to $28.2 million (the “BDG loan”) at an interest rate of 8.0% per annum . As of December 31, 2017, we have funded $22.4 million under the BDG loan and for the year ended December 31, 2017, we recognized $1.7 million of interest income on the BDG loan. See Note 6 to the accompanying consolidated financial statements.
One City Center
On February 25, 2016, we announced our joint venture with Austin Lawrence Partners to develop and construct One City Center in Durham, North Carolina. One City Center is a 22-story mixed-use project that is expected to include 130,000 square feet of office space, anchored by a 55,000 square foot lease with Duke University and a 62,000 square foot lease with WeWork, along with 22,000 square feet of street-level retail space and 139 residential units. We are a minority partner in the joint venture and will serve as the project's general contractor, with full ownership of the office and retail portions of the project upon completion. Our equity investment in the joint venture as of December 31, 2017 is approximately $11.4 million. The project is scheduled to be completed in mid-2018. The project at One City Center is an unconsolidated joint venture.

Annapolis Junction

On April 21, 2016, we entered into a note receivable with a maximum principal balance of $48.1 million in the Annapolis Junction residential component of the Annapolis Junction Town Center project in Maryland (“Annapolis Junction”). Annapolis Junction is an estimated $106.0 million mixed-use development project with plans for 416 residential units, 17,000 square feet of retail space, and a 150-room hotel. Annapolis Junction Apartments Owner, LLC (“AJAO”) is the developer of the residential component and has engaged us to serve as construction general contractor for the residential component. Annapolis Junction opened during the fourth quarter of 2017. Leasing activities continue, and stabilization is anticipated in the first quarter of 2019; however, we can provide no assurances that the stabilization of Annapolis Junction will occur on the anticipated timeline or at the anticipated cost.
AJAO secured a senior construction loan of up to $60.0 million to fund the development and construction of Annapolis Junction's residential component on September 30, 2016. We have agreed to guarantee $25.0 million of the senior construction loan in exchange for the option to purchase up to an 88% controlling interest in Annapolis Junction upon completion of the project as follows: (i) an option to purchase an 80% indirect interest in Annapolis Junction's residential component for the lesser of the seller’s budgeted or actual cost, exercisable within one year from the project’s completion (the “First Option”) and (ii) provided that we have exercised the First Option, an option to purchase an additional 8% indirect interest in Annapolis Junction for the lesser of the seller’s actual or budgeted cost, exercisable within 27 months from the project’s completion. Our investment in the Annapolis Junction project is in the form of a loan under which AJAO may borrow up to $48.1 million at an interest rate of 10.0% per annum, including a $6.0 million interest reserve (the “AJAO loan”). During the years ended December 31, 2017 and 2016, we recognized $4.1 million and $2.0 million, respectively, of interest income on the note. The balance on the Annapolis Junction note was $43.0 million and $38.9 million as of December 31, 2017 and 2016, respectively.

North Decatur Square

On May 15, 2017, we invested in the development of an estimated $34.0 million Whole Foods-anchored center located in Decatur, Georgia. Our investment is in the form of a mezzanine loan of up to $21.8 million to the developer, North Decatur Square Holdings, LLC. The mezzanine loan bears interest at an annual rate of 15%. As of December 31, 2017, we had funded $11.8 million on this loan. During the year ended December 31, 2017, we recognized $1.0 million of interest income on this loan. On January 31, 2018, this loan was modified to increase the maximum amount of the loan to $25.7 million due to an increase in the scope of the project.

Delray Plaza

On October 27, 2017, we invested in the development of an estimated $20.0 million Whole Foods-anchored center located in Delray Beach, Florida. OurThe Company's investment is in the form of a mezzanine loan of up to $13.1 million to the developer, Delray Plaza Holdings, LLC. The mezzanineDuring 2020, this loan bears interestwas modified to increase the maximum amount of the loan to $17.0 million, with $2.0 million of additional funds borrowed at an annualinterest rate of 15%.6.0% in order to fund final development activities. The loan was also modified to extend the maturity date of the loan to April 27, 2021. As a partial loan repayment, the borrower tendered 125,843 Class A Units that were pledged as collateral for this loan. The borrower also established a $2.5 million reserve account to be used for certain unpaid development project costs. We plan to purchase Delray Plaza during the first quarter of 2021.

The balance on the Delray Plaza note was $14.3 million as of December 31, 2017, we had funded $5.4 million on this loan.2020. During the year ended December 31, 2017,2020, we recognized $0.2$0.5 million of interest income on this loan.

Acquisitions and Dispositions
On January 4, 2017, we acquired undeveloped land in Charleston, South Carolina for a contract price of $7.1 million plus capitalized acquisition costs of $0.2 million. We are using the land for the development of the 595 King Street property.

On January 20, 2017, we completed the sale of the Wawa outparcel at Greentree Shopping Center. Net proceeds after transaction costs were $4.4 million. The gain on the disposition was $3.4 million.

On July 11, 2017, we acquired undeveloped land in Charleston, South Carolina for a contract price of $7.2 million plus capitalized acquisition costs of $0.1 million. We are using the land for the development of the 530 Meeting Street property.

On July 13, 2017, we completed the sale of two office properties leased by the Commonwealth of Virginia in Chesapeake, Virginia and Virginia Beach, Virginia. Aggregate net proceeds from the dispositions of the properties after transaction costs and repayment of the loan associated with the Chesapeake, Virginia property were $7.9 million, and the aggregate gain on the dispositions was $4.2 million.


On July 25, 2017, we acquired the outparcel phase of Wendover Village in Greensboro, North Carolina for a contract price of $14.3 million plus capitalized acquisition costs of $0.1 million.

On August 10, 2017, we completed the sale of a land outparcel at Sandbridge Commons. Net proceeds after transaction costs and a partial loan paydown were $0.3 million. The gain on the disposition was $0.5 million.

Subsequent to December 31, 2017

On January 9, 2018, we acquired Indian Lakes Crossing, a Harris Teeter-anchored shopping center in Virginia Beach, Virginia, for a contract price of $14.7 million plus capitalized acquisition costs of $0.2 million.

On January 29, 2018, we acquired Parkway Centre, a newly developed Publix-anchored shopping center in Moultrie, Georgia, for total consideration of $11.3 million ($9.6 million in cash and $1.7 million in the form of OP Units) plus estimated capitalized acquisition costs of $0.3 million.

On November 30, 2017, we entered into a lease agreement with Bottling Group, LLC for a new distribution facility that we will develop and construct for expected delivery in 2018. On January 29, 2018, we acquired undeveloped land in Chesterfield, Virginia, a portion of which will serve as the site for this facility, for a contract price of $2.4 million plus capitalized acquisition costs of $0.1 million.

On February 16, 2018, through a consolidated joint venture, we acquired undeveloped land in Mount Pleasant, South Carolina for a contract price of $2.9 million plus capitalized acquisition costs of $0.1 million. We plan to use the land for the development of an estimated $23.0 million Lowes Foods-anchored shopping center.

Segments
As of December 31, 2017, we operated in four business segments: (i) office real estate, (ii) retail real estate, (iii) multifamily residential real estate and (iv) general contracting and real estate services. Additional information regarding our four operating segments is set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and innote. See Note 36 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.

    Interlock Commercial

    On December 21, 2018, we entered into a mezzanine loan agreement with the developer of the office and retail components of The Interlock, a new mixed-use public-private partnership with Georgia Tech in West Midtown Atlanta. The loan has a maximum principal amount of $67.0 million and a total maximum commitment, including accrued interest reserves, of $103.0 million. The mezzanine loan bears interest at a rate of 15.0% per annum, with $3.0 million of overrun advances bearing interest at a rate of 18.0%. The loan matures on the earlier of (i) 24 months after the original maturity date or earlier termination date of the senior construction loan or (ii) any sale, transfer, or refinancing of the project. In the event that the maturity date is established as being 24 months after the original maturity date or earlier termination date of the senior construction loan, the developer will have the right to extend the maturity date for five years.

10
    On October 2, 2020, we modified the Interlock Commercial loan to decrease the exit fee, subject to the satisfaction of certain conditions. As a result, our exit fee for this loan may range from $6.5 million to $7.5 million.

    The balance on the Interlock Commercial note was $85.3 million as of December 31, 2020. During the year ended December 31, 2020, we recognized $12.3 million of interest income on the note. See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.

    Solis Apartments at Interlock

    On December 21, 2018, we entered into a mezzanine loan agreement with the developer of Solis Apartments at Interlock, which is the apartment component of The Interlock in West Midtown Atlanta. The mezzanine loan has a maximum principal commitment of $25.2 million and a total maximum commitment, including accrued interest reserves, of $41.1 million. The mezzanine loan bears interest at a rate of 13.0% per annum and matures on the earlier of (a) the later of (i) December 21, 2021 or (ii) the maturity date or earlier termination date of the senior construction loan, including any extensions of the senior construction loan, or (b) the date of any sale of the project or refinance of the loan.

    The balance on the Solis Apartments at Interlock note was $29.0 million as of December 31, 2020. During the year ended December 31, 2020, we recognized $3.4 million of interest income on the note. See Note 6 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K.

Harbor Point Parcel 3

On November 30, 2020, we acquired a 50% noncontrolling interest in Harbor Point Parcel 3, a joint venture with Beatty Development Group, for purposes of developing an office building in Baltimore, Maryland. We will serve as the project's general contractor. Harbor Point Parcel 3 is a project to develop and build T. Rowe Price's new 450,000 square feet global headquarters in Baltimore's Harbor Point. During the year ended December 31, 2020, we invested $1.1 million in Harbor Point Parcel 3. For the year ended December 31, 2020, Harbor Point Parcel 3 had no operating activity, and therefore we received no allocated income.

Acquisitions and Dispositions
 
    On January 10, 2020, we purchased land in Charlotte, North Carolina, for a purchase price of $6.3 million for the development of a mixed-use property.

On March 20, 2020, we purchased land in Belmont, North Carolina, for a purchase price of $2.3 million for the development of a mixed-use property.

On May 29, 2020, we sold a portfolio of seven retail properties for gross proceeds before expenses of $90.0 million. The portfolio consisted of Alexander Pointe, Bermuda Crossroads, Gainsborough Square, Harper Hill Commons, Indian Lakes Crossing, Renaissance Square, and Stone House Square. The gain on sale was $2.8 million. In connection with the sale of this portfolio, we repaid $61.9 million on the revolving credit facility, resulting in net proceeds of $25.9 million.

In June 2020, we exercised our option to purchase the remaining 21.0% ownership interest in 1405 Point in exchange for increased ground lease payments to be made over the approximately 42-year remaining lease term. We recorded a note payable of $6.1 million, which represents the present value of these payments.

On August 31, 2020, we purchased land in Gainesville, Georgia, for a purchase price of $5.0 million for the development of a multifamily property.

On September 1, 2020, we completed the sale of the Walgreen's outparcel at Hanbury Village. Net proceeds after the transaction costs were $7.0 million. The gain on disposition was $3.6 million.

On September 22, 2020, we exercised our option to purchase Nexton Square for $17.9 million cash and the assumption of a note payable of $22.9 million. The developer of this property repaid our mezzanine note receivable of $16.4 million at the time of the acquisition.

On October 1, 2020, we acquired Edison Apartments, a multifamily building located in downtown Richmond, Virginia, for consideration comprised of 633,734 Class A Units, the assumption of a $16.4 million loan payable, and the
11
assumption of $1.1 million in other assets and liabilities. The seller of the property was a partnership that includes several members from our management team and board of directors.

On October 30, 2020, we acquired 79.0% of the partnership that owns The Residences at Annapolis Junction. As part of this purchase, we extinguished the note receivable for this project and made a cash payment of $0.2 million. We also assumed an $83.4 million senior loan as part of this acquisition, which was immediately refinanced with a new $84.4 million loan.

Subsequent to December 31, 2020

On January 4, 2021, the Company completed the sale of the 7-Eleven outparcel at Hanbury Village. Net proceeds after the transaction costs were $2.8 million. The gain on disposition is estimated at $2.4 million.

Impact of COVID-19 on Our Business

Overview

In light of the changing nature of the COVID-19 pandemic and uncertainty regarding the duration, severity, the unknown timing or effectiveness of vaccine or other treatments, and possible resurgences of COVID-19 cases in future periods, the full impact that the COVID-19 pandemic will have on our business is currently unknown and unquantifiable. While the full extent of the COVID-19 pandemic’s impact on the U.S. economy and the U.S. real estate industry remains to be seen, the pandemic has presented significant challenges for us and many of our tenants. In the near-term, we and many of our tenants are focusing on implementing contingency plans to manage business disruptions caused by the pandemic and related actions intended to mitigate its spread. In the long-term, we might need to re-assess and consider modifying our operating model, underwriting criteria, and liquidity position to mitigate the impacts of future economic downturns, including as a result of a future resurgence of COVID-19 cases, the timing, severity, and duration of which cannot be predicted.

We anticipate that the global health crisis caused by COVID-19 and the related responses intended to mitigate its spread will continue to adversely affect business activity, particularly relating to our retail tenants, across the markets in which we operate. We have observed the impact of COVID-19 manifest in the form of business closures or significantly limited operations for periods of time in our retail portfolio, with the exception of tenants operating in certain "essential" businesses, which has resulted, and may in the future result in, a decline in on-time rental payments, increased requests from tenants for temporary rental relief, and potentially permanent closure of certain businesses. We expect these conditions to continue in varying duration and severity until such time when the COVID-19 pandemic is effectively contained. When COVID-19 is contained, depending on the rate and effectiveness of the containment efforts deployed by various national, state, and local governments, we anticipate a rebound in economic activity, although we are unable to predict the nature, timing, and sustainability of an economic recovery.

In an effort to protect the health and safety of our employees, as part of our initial response to the COVID-19 outbreak we took proactive, aggressive actions to adopt social distancing policies at our offices, properties, and construction jobsites, including: transitioning our office employees to a remote work environment during certain periods of time, which was greatly assisted by recent enhancements to our IT systems; limiting the number of employees attending in-person meetings; implementing limitations on travel; and ensuring all construction jobsites continue to comply with state and local social distancing and other health and safety protocols implemented by the Company.

To further strengthen our financial flexibility and efficiently manage through the uncertainty caused by the COVID-19 pandemic, our board of directors temporarily suspended the payment of quarterly cash dividends on shares of our common stock and Class A common units for the second quarter of 2020. As a result of improvement in general economic conditions and our operating performance, our board of directors reinstated quarterly cash dividends on shares of our common stock and Class A common units with dividends of $0.11 per share and unit, for both the third and fourth quarters of 2020 and $0.15 per share and unit for the first quarter of 2021. Declared cash dividends were $0.44 per share for the year ended December 31, 2020. 

In addition, in an effort to strengthen our financial flexibility and efficiently manage through the uncertainty caused by the COVID-19 pandemic, Lou Haddad, our President and Chief Executive Officer, voluntarily elected to reduce his base salary by 25%, and each of our directors, including Dan Hoffler and Russ Kirk, voluntarily elected to reduce their cash retainers and the value of their annual equity awards by 25%, in each case effective as of May 1, 2020. On February 18, 2021, as a result of improvement in general economic conditions and our operating performance, the Company's board of directors reinstated the
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base salary of Lou Haddad, the Company's President and Chief Executive Officer, and each of the Company's directors to 100% of their respective pre-COVID-19 compensation levels, effective January 1, 2021.

From an operational perspective, we have remained in regular communication with our tenants, property managers, and vendors, and, where appropriate, have provided guidance relating to the availability of government relief programs that could support our tenants’ businesses. In response to the market and industry trends, we also have pursued, and expect to continue to pursue, cost-saving initiatives to align our overall cost structure, including proactively deferring previously announced development activity at several of our projects, postponing certain acquisition activity, slowing down redevelopment activity at The Cosmopolitan, and suspending non-essential capital expenditures. Although we believe these measures and other measures we may implement in the future will help mitigate the financial impacts of the pandemic on our business, there can be no assurances that we will accurately forecast the impact of adverse economic conditions on our business or that we will effectively align our cost structure, capital investments, and other expenditures with our revenue and spending levels in the future.

To evaluate market trends affecting public REITs across asset classes and to assess our response to COVID-19 relative to our peers, we have been monitoring information that has been released by public REITs, summary data released by the National Association of Real Estate Investment Trusts ("Nareit") and other publicly available sources, and information obtained during our regular discussions with tenants. While we view information gathered from publicly available sources as helpful in assessing broader trends affecting the commercial real estate industry, we can provide no assurances that the estimates and assumptions used in preparing this third-party information are applicable to our business or ultimately will prove to be accurate. In addition, our asset management team, together with the rest of senior management, has dedicated significant resources to monitoring detailed portfolio performance on a real-time basis, including rent collections, requests for rent relief and uncollected payments, as well as negotiating rent deferments and other relief with certain of our tenants.

We will continue to actively monitor the implications of the COVID-19 pandemic on our and our tenants’ businesses and may take further actions to alter our business practices if we determine that such changes are in the best interests of our employees, tenants, residents, stockholders, and third-party construction customers, or as required by federal, state, or local authorities. It is not clear what the potential effects of such alterations or modifications, if any, may have on our business, including the effects on our tenants and residents and the corresponding impact on our results of operations and financial condition for fiscal 2021 and thereafter.

    The Coronavirus Aid, Relief and Economic Security Act, or the CARES Act, was enacted on March 27, 2020 in the United States. We have availed ourselves of the option to defer payment of the employer share of Social Security payroll taxes totaling $0.6 million that would otherwise have been owed from the date of enactment of the CARES Act through December 31, 2020. In December 2020, Congress passed the Consolidated Appropriations Act, 2021, which includes a second economic stimulus package to address the impact of the COVID-19 pandemic. We continue to assess the potential impacts of the current federal stimulus and relief legislation and any subsequent legislation, including our eligibility and our tenants for funding under programs designed to provide financial assistance to U.S. businesses.

We believe the diversification of our business across multiple asset classes (i.e., office, retail, and multifamily), together with our third-party construction business, will help to mitigate the impact of the pandemic on our business to a greater extent than if our business were concentrated in a single asset class. However, as discussed in greater detail below, we expect the impact of the pandemic to continue to have a particularly adverse effect on many of our retail tenants, which will continue to adversely affect our results of operations even if the performance of our office and multifamily assets and our construction business remain close to historical levels. Furthermore, if the impacts of the pandemic continue for an extended period of time, we expect that certain office tenants and multifamily residents will experience greater financial distress, which could result in late payments, requests for rental relief, business closures, decreases in occupancy, reductions in rent, or increases in rent concessions or other accommodations, as applicable.

Operating Property Portfolio

Office Tenants

As of January 31, 2021, we had collected 100% of office tenant rent due for the fourth quarter of 2020 and 100% of office tenant rent for January 2021. Data reported corresponds to tenant type and does not correspond to the reporting segment classification of the properties as a whole.

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In June 2020, following discussion with WeWork, we agreed to terminate the lease of the top two office floors of Wills Wharf in Harbor Point, prior to our funding any tenant improvements. We received a termination fee of $1.3 million, including a $1.0 million reimbursement of legal and leasing fees.

Retail Tenants

In an effort to contain COVID-19 or slow its spread, state and local governments have enacted various measures at various times, including orders to close all businesses not deemed essential, isolate residents to their homes or places of residence, and practice social distancing when engaging in essential activities. These government-imposed measures, coupled with customers reducing their in-person purchasing activity in light of health concerns or personal financial distress, have resulted in significant disruptions to retail businesses around the country, including in the markets in which we own retail assets.

    In October 2020, we terminated the leases for Regal Cinemas in Columbus Village II (part of the Town Center of Virginia Beach) and Harrisonburg, Virginia. We are evaluating potential uses for the existing buildings as well as potential redevelopment concepts at each location. We wrote off the accounts receivable for this tenant as an adjustment to rental revenue totaling $1.0 million during the third and fourth quarter of 2020. Subsequently, the Company chose to reinstate the leases with Regal Cinemas under modified terms favorable to the Company for Harrisonburg on November 18, 2020 and for Columbus Village on January 25, 2021. The tenant is not currently paying rent and remains on a cash basis for revenue recognition purposes.

As of January 31, 2021, we had collected 96% of retail tenant rent due for the fourth quarter of 2020 and 95% of retail tenant rent due for January 2021. In addition, the Company recorded $0.1 million in bad debt charges for the three months ended December 31, 2020, which is recorded as an adjustment to rental revenues and was primarily due to retail tenant delinquencies resulting from the COVID-19 pandemic. The collection rates exclude rent due under the two reinstated leases with Regal Cinemas. The collection rates include recoveries of previously deferred rent balances based on the repayment plans agreed to with the tenants. The remaining uncollected deferred rent balance as of January 31, 2020 was $1.8 million, of which approximately $1.5 million is expected to be collected in 2021 with the remaining amount anticipated for collection in 2022. The collection rates and deferred rent balances are for the retail tenants at our properties. The classification of the tenants may not correspond to the reporting segment classification of the properties as a whole.

As of December 31, 2020, we had the following significant known lease terminations:
TenantPropertyEffective DateSF ImpactABR ImpactABR per Leased SF
Bed Bath & BeyondNorth Point Center1/31/202130,000 $187,500 $6.25 
Bed Bath & BeyondWendover Village1/31/202133,696 300,568 8.92 
Bi-Lo (a)
Socastee Commons6/30/202146,673 492,400 10.55 
Total/Weighted Average110,369 $980,468 $8.88 

(a) Vacancy allows the Company to consider redevelopment of this property.

Multifamily Tenants

As of January 31, 2021, we had collected 99% of multifamily tenant rent due for the fourth quarter of 2020 and 98% of multifamily tenant rent due for January 2021. Data reported corresponds to tenant type and does not correspond to the reporting segment classification of the properties as a whole.

Due to actions taken by local, state, and federal governments and limited working capacity for government courts and agencies, certain properties in our multifamily portfolio were subject to increased restrictions that limited our ability to evict tenants or charge late fees through March 31, 2021. At this time, certain restrictions previously in place have been lifted and many government courts and agencies have re-opened; however, there may be similar restrictions and limited working capacity for government courts and agencies in the future.

On September 4, 2020, the Centers for Disease Control and Prevention (the "CDC") issued an order to temporarily halt residential evictions to prevent the further spread of COVID-19 that effectively prohibits evictions for nonpayment through March 31, 2021 nationwide for residential tenants who submit a signed copy of a declaration form to their landlords. The specific declaration form to be used was prepared by the CDC and attached to the order. The order did not, on its own, prevent landlords from filing suits, obtaining judgments, or filing writs. It only prevents landlords from carrying out evictions if the
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tenant submits the signed declaration form to the landlord. If the tenant does not provide the declaration, the tenant can be evicted. The order does not apply to evictions that are for reasons other than nonpayment rent. The penalties for an organization that violates the order include fines of up to $200,000 per event ($500,000 if the eviction results in death). The order does not relieve any individual of any obligation to pay rent or comply with any other obligation under a lease, nor does it preclude the charging or collecting of fees, penalties, or interest as a result of the failure to pay rent under the terms of a lease. The order does not apply to commercial tenants.

As of the date of this Annual Report on Form 10-K, all residential landlords filing an eviction action in the State of North Carolina must provide the tenant with the required CDC Declaration form. If the landlord receives a completed Declaration form from the tenant, the landlord may not proceed to request a writ of possession. Evictions for reasons other than nonpayment of rent are not prohibited. These conditions apply to Greenside Apartments.

State and local restrictions that remain in place for 1405 Point and Johns Hopkins Village, both located in Baltimore, Maryland, and for The Residences at Annapolis Junction, located in Howard County, Maryland are detailed below:

•City/County restrictions in place which prohibitrent increases, notices of increases, or assessment of late fees during the Maryland state of emergency. These restrictions will be in place until the governor's state of emergency is lifted and for ninety (90) days thereafter.
•State restrictions in place which prohibit evictions of tenants affected by COVID-19. Evictions cannot be processed until the state of emergency is terminated and the catastrophic health emergency is rescinded. The governor’s state of emergency order was renewed again on January 21, 2021.

Furthermore, the restriction on evictions in the State of Maryland applies to both our commercial and residential properties located in that state.

Construction and Development Business

As of the date of this Annual Report on Form 10-K, all of our construction jobsites remain open and operational, and we intend to continue third-party construction work unless government-imposed restrictions are implemented that prohibit or significantly restrict the continuation of construction work. As of December 31, 2020, we had a third-party construction backlog of approximately $71.3 million.

With respect to our development pipeline, we proactively deferred the Chronicle Mill, Southern Post, and Ten Tryon development projects in order to provide additional balance sheet flexibility until economic conditions stabilize, each of which had previously been scheduled to commence during the second quarter of 2020. The Summit Place project was completed in June 2020, and portions of the Wills Wharf project were completed during the second quarter of 2020. The remaining portions of the project are expected to be completed in 2021.

We anticipate commencing construction at Chronicle Mill during the first quarter of 2021 and commencing construction at Southern Post during the second half of 2021.

Mezzanine Lending Program

    We continue to monitor the development projects securing our mezzanine loans:

Delray Plaza: Effective April 1, 2020, we stopped recognizing interest on this loan for accounting purposes since collection of additional interest accruals was less certain.

The Residences at Annapolis Junction: On October 30, 2020, we purchased 79.0% of the partnership that owns this project and extinguished our note receivable.

Nexton Square: We exercised our option to purchase Nexton Square on September 22, 2020. The mezzanine loan was repaid as part of this purchase.

Solis Apartments at Interlock: Portions of this project were completed during the fourth quarter of 2020, and the remaining portions are planned to be completed during the second quarter of 2021. Current estimates of future operating results and projected sales proceeds from this project continue to support the full collection of our principal and interest upon sale of the project.

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Interlock Commercial: Portions of this project are being delivered to tenants during the first quarter of 2021, with additional space to be delivered during the remainder of 2021 and 2022. In May 2020, we modified the mezzanine loan to allow for an additional $8.0 million of loan funding for purposes of building townhome units as an additional phase of this development project. Current estimates of future operating results and projected sales proceeds from this project continue to support the full collection of our principal and interest upon sale of the project. On October 2, 2020, we modified the loan to decrease the exit fee upon satisfaction of certain conditions.

    We continue to monitor leasing activity at these projects, as applicable, and will monitor the impact of COVID-19 on leasing activity and development activity at each of these projects.

Tax Status
 
We have elected and qualified to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2013. Our continued qualification as a REIT will depend upon our ability to meet, on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”"Code"), relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels, and the diversity of ownership of our capital stock. We believe that we are organized in conformity with the requirements for qualification as a REIT under the Code and that our manner of operation will enable us to maintain the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes. In addition, we have elected to treat AHP Holding, Inc., which, through its wholly-owned subsidiaries, operateoperates our construction, development, and third-party asset management businesses, as a taxable REIT subsidiary (“TRS”("TRS").
 
As a REIT, we generally will not be subject to U.S. federal income tax on our net taxable income that we distribute currently to our stockholders. Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute each year at least 90% of their REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. If we fail to qualify for taxation as a REIT in any taxable year and do not qualify for certain statutory relief provisions, our income for that year will be taxed at regular corporate rates, and we would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. Even if we qualify as a REIT for U.S. federal income tax purposes, we may still be subject to state and local taxes on our income and assets and to federal income and excise taxes on our undistributed income. Additionally, any income earned by our services company, and any other TRS we form in the future, will be fully subject to federal, state and local corporate income tax.

Insurance
 
We carry comprehensive liability, fire, extended coverage, business interruption, and rental loss insurance covering all of the properties in our portfolio under a blanket insurance policy in addition to other coverage that may be appropriate for certain of our properties. We believe the policy specifications and insured limits are appropriate and adequate for our properties

given the relative risk of loss, the cost of the coverage, and industry practice; however, our insurance coverage may not be sufficient to fully cover our losses. We do not carry insurance for certain losses, including, but not limited to, losses caused by riots or war. Some of our policies, likesuch as those covering losses due to terrorism and earthquakes, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses for such events. In addition, all but two of the properties in our portfolio as of December 31, 20172020 were located in Maryland, Virginia, Maryland, North Carolina, and South Carolina, and Georgia, which are areas subject to an increased risk of hurricanes. While we will carry hurricane insurance on certain of our properties, the amount of our hurricane insurance coverage may not be sufficient to fully cover losses from hurricanes. We may reduce or discontinue hurricane, terrorism, or other insurance on some or all of our properties in the future if the cost of premiums for any of these policies exceeds, in our judgment, the value of the coverage discounted for the risk of loss. Also, if destroyed, we may not be able to rebuild certain of our properties due to current zoning and land use regulations. As a result, we may incur significant costs in the event of adverse weather conditions and natural disasters. In addition, our title insurance policies may not insure for the current aggregate market value of our portfolio, and we do not intend to increase our title insurance coverage as the market value of our portfolio increases. If we or one or more of our tenants experiences a loss that is uninsured or that exceeds policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged. Furthermore, we may not be able to obtain adequate insurance coverage at reasonable costs in the future as the costs associated with property and casualty renewals may be higher than anticipated.  
 
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Regulation
 
General
 
Our properties are subject to various covenants, laws, ordinances, and regulations, including regulations relating to common areas and fire and safety requirements. We believe that each of the properties in our portfolio has the necessary permits and approvals to operate its business.
 
Americans With Disabilities Act
 
Our properties must comply with Title III of the Americans with Disabilities Act of 1990 (the “ADA”"ADA"), to the extent that such properties are “public accommodations”"public accommodations" as defined by the ADA. Under the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable. Although we believe that the properties in our portfolio in the aggregate substantially comply with present requirements of the ADA, we have not conducted a comprehensive audit or investigation of all of our properties to determine our compliance, and we are aware that some particular properties may currently be in non-compliance with the ADA. Noncompliance with the ADA could result in the incurrence of additional costs to attain compliance, the imposition of fines, an award of damages to private litigants, and a limitation on our ability to refinance outstanding indebtedness. The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations as appropriate in this respect.


Environmental Matters
 
Under various federal, state, and local laws and regulations relating to the environment, as a current or former owner or operator of real property, we may be liable for costs and damages resulting from the presence or discharge of hazardous or toxic substances, waste, or petroleum products at, on, in, under, or migrating from such property, including costs to investigate and clean up such contamination and liability for harm to natural resources. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such contamination, and the liability may be joint and several. These liabilities could be substantial, and the cost of any required remediation, removal, fines, or other costs could exceed the value of the property and our aggregate assets. In addition, the presence of contamination or the failure to remediate contamination at our properties may expose us to third-party liability for costs of remediation and personal or property damage or materially adversely affect our ability to sell, lease, or develop our properties or to borrow using the properties as collateral. In addition, environmental laws may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures.
 
Some of our properties contain, have contained, or are adjacent to or near other properties that have contained or currently contain storage tanks for the storage of petroleum products, propane, or other hazardous or toxic substances.

Similarly, some of our properties were used in the past for commercial or industrial purposes, or are currently used for commercial purposes, that involve or involved the use of petroleum products or other hazardous or toxic substances, or are adjacent to or near properties that have been or are used for similar commercial or industrial purposes. As a result, some of our properties have been or may be impacted by contamination arising from the releases of such hazardous substances or petroleum products. Where we have deemed appropriate, we have taken steps to address identified contamination or mitigate risks associated with such contamination; however, we are unable to ensure that further actions will not be necessary. As a result of the foregoing, we could potentially incur material liability.
 
Environmental laws also govern the presence, maintenance, and removal of asbestos-containing building materials, or ACBM, and may impose fines and penalties for failure to comply with these requirements or expose us to third-party liability. Such laws require that owners or operators of buildings containing ACBM (and employers in such buildings) properly manage and maintain the asbestos, adequately notify or train those who may come into contact with asbestos, and undertake special precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a building. In addition, the presence of ACBM in our properties may expose us to third-party liability (e.g. liability for personal injury associated with exposure to asbestos). We are not presently aware of any material adverse issues at our properties including ACBM.
 
Similarly, environmental laws govern the presence, maintenance, and removal of lead-based paint in residential buildings, and may impose fines and penalties for failure to comply with these requirements. Such laws require, among other
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things, that owners or operators of residential facilities that contain or potentially contain lead-based paint notify residents of the presence or potential presence of lead-based paint prior to occupancy and prior to renovations and manage lead-based paint waste appropriately. In addition, the presence of lead-based paint in our buildings may expose us to third-party liability (e.g., liability for personal injury associated with exposure to lead-based paint). We are not presently aware of any material adverse issues at our properties involving lead-based paint.
 
In addition, the properties in our portfolio also are subject to various federal, state, and local environmental and health and safety requirements, such as state and local fire requirements. Moreover, some of our tenants may handle and use hazardous or regulated substances and wastes as part of their operations at our properties, which are subject to regulation. Such environmental and health and safety laws and regulations could subject us or our tenants to liability resulting from these activities. Environmental liabilities could affect a tenant’s ability to make rental payments to us. In addition, changes in laws could increase the potential liability for noncompliance. Our leases sometimes require our tenants to comply with environmental and health and safety laws and regulations and to indemnify us for any related liabilities. ButHowever, in the event of the bankruptcy or inability of any of our tenants to satisfy such obligations, we may be required to satisfy such obligations. In addition, we may be held directly liable for any such damages or claims regardless of whether we knew of, or were responsible for, the presence or disposal of hazardous or toxic substances or waste and irrespective of tenant lease provisions. The costs associated with such liability could be substantial and could have a material adverse effect on us.


When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses, and bacteria. Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants, employees of our tenants, or others if property damage or personal injury occurs. We are not presently aware of any material adverse indoor air quality issues at our properties.
 
Competition
 
We compete with a number of developers, owners, and operators of office, retail, and multifamily real estate, many of which own properties similar to ours in the same markets in which our properties are located and some of which have greater financial resources than we do. In operating and managing our portfolio, we compete for tenants based on a number of factors, including location, rental rates, security, flexibility, and expertise to design space to meet prospective tenants’ needs and the manner in which the property is operated, maintained, and marketed. As leases at our properties expire, we may encounter significant competition to renew or re-lease space in light of the large number of competing properties within the markets in which we operate. As a result, we may be required to provide rent concessions or abatements, incur charges for tenant improvements and other inducements, including early termination rights or below-market renewal options, or we may not be able to timely lease vacant space.

    
We also face competition when pursuing development, acquisition, and acquisitionlending opportunities. Our competitors may be able to pay higher property acquisition prices, may have private access to opportunities not available to us, may have more financial resources than we do, and may otherwise be in a better position to acquire or develop a property. Competition may also have the effect of reducing the number of suitable development and acquisition opportunities available to us or increasing the price required to consummate a development or acquisition opportunity.
 
In addition, we face competition in our construction business from other construction companies in the markets in which we operate, including small local companies and large regional and national companies. In our construction business, we compete for construction projects based on several factors, including cost, reputation for quality and timeliness, access to machinery and equipment, access to and relationships with high-quality subcontractors, financial strength, knowledge of local markets, and project management abilities. We believe that we compete favorably on the basis of the foregoing factors and that our construction business is well-positioned to compete effectively in the markets in which we operate. However, some of the construction companies with which we compete have different cost structures and greater financial and other resources than we do, which may put them at an advantage when competing with us for construction projects. Competition from other construction companies may reduce the number of construction projects that we are hired to complete and increase pricing pressure, either of which could reduce the profitability of our construction business.
 
Employees
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Human Capital
 
As of December 31, 2017,2020, we had 160158 employees. NoneWe operate in the highly competitive real estate industry. Attracting, developing, and retaining talented people in construction, asset management, marketing, development, and other positions is crucial to executing our strategy and our ability to compete effectively. Our ability to recruit and retain such talent depends on a number of factors, including compensation and benefits, talent development and career opportunities, and work environment. To that end, we offer a comprehensive total rewards program aimed at the varying health, home-life and financial needs of our employees are represented by a collective bargaining unit. We believe that our relationship with our employees is good.diverse associates. Our total rewards package includes market-competitive pay, broad-based stock grants and bonuses, healthcare benefits, retirement savings plans, paid time off and family leave, flexible work schedules, free flu vaccinations, and an employee assistance program and other mental health services.
 
Corporate Information
 
Our principal executive office is located at 222 Central Park Avenue, Suite 2100, Virginia Beach, Virginia 23462 in the Armada Hoffler Tower at the Town Center of Virginia Beach. In addition, we have a construction officesoffice located at 249 Central Park Avenue, Suite 300, Virginia Beach, Virginia 23462 and 1300 Thames Street, Suite 30, Baltimore, Maryland 21231.21231 in Thames Street Wharf at Harbor Point. The telephone number for our principal executive office is (757) 366-4000. We maintain a website located at www.armadahoffler.com.ArmadaHoffler.com. The information on, or accessible through, our website is not incorporated into and does not constitute a part of this Annual Report on Form 10-K or any other report or document we file with or furnish to the SEC.


Available Information
 
We file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports with the SEC. You may obtain copies of these documents by visiting the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, by calling the SEC at 1-800-SEC-0330 or by accessing the SEC’s website at www.sec.gov. In addition, as soon as reasonably practicable after such materials are furnished to the SEC, we make copies of these documents available to the public free of charge through our website or by contacting our Corporate Secretary at the address set forth above under “—"—Corporate Information.”"
 
Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, and the charters of our audit committee, compensation committee and nominating and corporate governance committee are all available in the Corporate Governance section of the Investor Relations section of our website. Any amendment to or waiver of our Code of Business Conduct and Ethics will be disclosed in the Corporate Governance section of the Investor Relations section of our website within four business days of the amendment or waiver.
 
Financial Information
 
For required financial information related to our operations, please refer to our consolidated financial statements, including the notes thereto, included with this Annual Report on Form 10-K.



Item 1A.Risk Factors  
Item 1A.    Risk Factors  
 
Set forth below are the risks that we believe are material to our stockholders. You should carefully consider the following risks in evaluating our Company and our business. The occurrence of any of the following risks could materially and adversely impact our financial condition, results of operations, cash flow, the market price of shares of our common stock, and our ability to, among other things, satisfy our debt service obligations and to make distributions to our stockholders, which in turn could cause our stockholders to lose all or a part of their investment. Some statements in this Annual Report on Form 10-K, including statements in the following risk factors constitute forward-looking statements. Please refer to the section entitled “Special"Special Note Regarding Forward-Looking Statements”Statements" at the beginning of this Annual Report on Form 10-K.
 
Risks Related to Our Business

The ongoing COVID-19 pandemic and measures intended to prevent its spread could have a material adverse effect on our business, results of operations, cash flows and financial condition.

In March 2020, the World Health Organization declared COVID-19 a pandemic and the United States declared a national emergency with respect to COVID-19. The pandemic has led governments and other authorities around the world, including federal, state and local authorities in the United States, to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures,
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quarantines and shelter-in-place orders. All of our properties and our headquarters are located in areas that are or have been subject to shelter-in-place orders and restrictions on the types of businesses that may continue to operate.

The impact of the COVID-19 pandemic and measures to prevent its spread could materially and adversely affect our businesses in a number of ways. Our rental revenue and operating results depend significantly on the occupancy levels at our properties and the ability of our tenants to meet their rent and other obligations to us. The government-imposed measures in response to the pandemic, coupled with customers reducing their purchasing activity in light of health concerns or personal financial distress, have resulted in significant disruptions to retail businesses around the country, including in the markets in which we own retail assets, which has resulted, and could continue to result in, tenants being unwilling or unable to pay rent in full on a timely basis or at all. For example, as of January 31, 2021, we had collected 96% of retail tenant rent due for the fourth quarter of 2020 and 95% of January rent due from our retail tenants. If the impacts of the pandemic continue for an extended period of time, we expect that certain office tenants and multifamily residents will experience greater financial distress, which could result in late payments, requests for rental relief, business closures, decreases in occupancy, reductions in rent, or increases in rent concessions or other accommodations, as applicable. In some cases, we may have to restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place. Certain of our office and retail tenants also may incur significant costs or losses responding to the COVID-19 pandemic, lose business due to any interruption in the operations of our properties or incur other losses or liabilities related to shelter-in-place orders, quarantines, infection or other related factors. In addition, numerous state, local, federal, and industry-initiated efforts may affect our ability to collect rent or enforce remedies for the failure to pay rent, particularly with respect to our multifamily properties. Our development and construction projects also could be adversely affected, including as a result of disruptions in supply chains and government restrictions on the types of projects that may continue during the pandemic. Additionally, borrowers under our mezzanine loan program may be unable to satisfy their obligations to us as a result of the deterioration of their businesses as a result of the pandemic. In addition, a significant number of our retail tenants have been forced to close temporarily or operate on a limited basis as a result of COVID-19 and related government actions, which has resulted in, and could continue to result in, delays in rent payments, rent concessions, early lease terminations or tenant bankruptcies.

Further, our management team is focused on mitigating the impacts of COVID-19, which has required and will continue to require, a large investment of time and resources across our business. Additionally, many of our employees are currently working remotely. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business.

The COVID-19 pandemic has also caused, and is likely to continue to cause, severe economic, market and other disruptions worldwide. We may be impacted by stock market volatility and illiquid market conditions, global economic uncertainty, and the perceived prospect for capital appreciation in real estate. We cannot assure you that conditions in the bank lending, capital and other financial markets will not continue to deteriorate as a result of the pandemic, or that our access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of future borrowings, renewals or refinancings. In addition, the deterioration of global economic conditions as a result of the pandemic may ultimately decrease occupancy levels and rents across our portfolio as tenants and residents reduce or defer their spending, which could adversely affect the value of our properties.

The extent of the COVID-19 pandemic’s effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic, the timing and effectiveness of vaccines and other treatments, possible resurgences in COVID-19 cases, and the duration of government measures to mitigate the pandemic, all of which are uncertain and difficult to predict. Due to the speed with which the situation is developing, we are not able at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material.

Our failure to establish new development relationships with public partners and expand our development relationships with existing public partners could have a material adverse effect on our results of operations, cash flow, and growth prospects.
    Our growth strategy depends significantly on our ability to leverage our extensive experience in completing large, complex, mixed-use public/private projects to establish new relationships with public partners and expand our relationships with existing public partners. Future increases in our revenues may depend significantly on our ability to expand the scope of the work we do with the state and local government agencies with which we currently have partnered and attract new state and local government agencies to undertake public/private development projects with us. Our ability to obtain new work with state and local governmental authorities on new public/private development and financing partnerships could be adversely affected by several factors, including decreases in state and local budgets, changes in administrations, the departure of government personnel with whom we have worked, and negative public perceptions about public/private partnerships. In addition, to the extent that we engage in public/private partnerships in states or local communities in which we have not previously worked, we could be subject to risks associated with entry into new markets, such as lack of market knowledge or understanding of the local
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economy, lack of business relationships in the area, competition with other companies that already have an established presence in the area, difficulties in hiring and retaining key personnel, difficulties in evaluating quality tenants in the area, and unfamiliarity with local governmental and permitting procedures. If we fail to establish new relationships with public partners and expand our relationships with existing public partners, it could have a material adverse effect on our results of operations, cash flow, and growth prospects.
We may be unable to identify and complete development opportunities and acquisitions of properties that meet our investment criteria, which may materially and adversely affect our results of operations, cash flow, and growth prospects.
    Our business and growth strategy involves the development and selective acquisition of office, retail, and multifamily properties. We may expend significant management time and other resources, including out-of-pocket costs, in pursuing these investment opportunities. Our ability to complete development projects or acquire properties on favorable terms, or at all, may be exposed to the following significant risks: 

•we may incur significant costs and divert management attention in connection with evaluating and negotiating potential development opportunities and acquisitions, including those that we are subsequently unable to complete;
•we have agreements for the development or acquisition of properties that are subject to conditions, which we may be unable to satisfy; and
•we may be unable to obtain financing on favorable terms or at all.
    If we are unable to identify attractive investment opportunities and successfully develop new properties, our results of operations, cash flow, and growth prospects could be materially and adversely affected.

The success of our activities to design, construct and develop properties in which we will retain an ownership interest is dependent, in part, on the availability of suitable undeveloped land at acceptable prices as well as our having sufficient liquidity to fund investments in such undeveloped land and subsequent development.
    Our success in designing, constructing, and developing projects for our own account depends, in part, upon the continued availability of suitable undeveloped land at acceptable prices. The availability of undeveloped land for purchase at favorable prices depends on a number of factors outside of our control, including the risk of competitive over-bidding on land and governmental regulations that restrict the potential uses of land. If the availability of suitable land opportunities decreases, the number of development projects we may be able to undertake could be reduced. In addition, our ability to make land purchases will depend upon our having sufficient liquidity or access to external sources of capital to fund such purchases. Thus, the lack of availability of suitable land opportunities and insufficient liquidity to fund the purchases of any such available land opportunities could have a material adverse effect on our results of operations and growth prospects.

Our real estate development activities are subject to risks particular to development, such as unanticipated expenses, delays and other contingencies, any of which could materially and adversely affect our financial condition, results of operations, and cash flow.
    We engage in development and redevelopment activities and will be subject to the following risks associated with such activities: 

•unsuccessful development or redevelopment opportunities could result in direct expenses to us and cause us to incur losses;
•construction or redevelopment costs of a project may exceed original estimates, possibly making the project less profitable than originally estimated, or unprofitable;
•the inability to obtain or delays in obtaining necessary governmental or quasi-governmental permits and authorizations could result in increased costs or abandonment of the project if necessary permits or authorizations are not obtained;
•delayed construction may give tenants the right to terminate pre-development leases, which may adversely impact the financial viability of the project;
•occupancy rates, rents and concessions of a completed project may fluctuate depending on a number of factors and may not be sufficient to make the project profitable; and
•the availability and pricing of financing to fund our development activities on favorable terms or at all may result in delays or even abandonment of certain development activities.

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    These risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent completion of development or redevelopment activities once undertaken, any of which could have a material adverse effect on our financial condition, results of operations, and cash flow.

The geographic concentration of our portfolio could cause us to be more susceptible to adverse economic or regulatory developments in the markets in which our properties are located than if we owned a more geographically diverse portfolio.
 
The majority of the properties in our portfolio are located in Virginia, Maryland, and North Carolina, which expose us to greater economic risks than if we owned a more geographically diverse portfolio. As of December 31, 2017,2020, our properties in the Virginia, Maryland and North Carolina markets represented approximately 68%52%, 23%, and 17%14%, respectively, of the total annualized base rent of the properties in our portfolio. Furthermore, many of our properties are located in the Town Center of Virginia Beach, and rental revenues from our Town Center properties represented 38%27% of our total rental revenues for the year ended December 31, 2017.2020. As a result of this geographic concentration, we are particularly susceptible to adverse economic, regulatory or other conditions in the Virginia, Maryland and North Carolina markets (such as periods of economic slowdown or recession, business layoffs or downsizing, industry slowdowns, relocations of businesses, increases in real estate and other taxes, and the cost of complying with governmental regulations or increased regulation), as well as to natural disasters that occur in these markets (such as hurricanes and other events). For example, the markets in Virginia, Maryland, and North Carolina in which many of the properties in our portfolio are located contain high concentrations of military personnel and operations. Aoperations, and a reduction of the military presence or cuts in defense spending in these markets could have a material adverse effect on us. If there is a downturn in the economy in Virginia, Maryland or North Carolina, our operations, revenue, and cash available for distribution, including cash available to pay distributions to our stockholders, could be materially and adversely affected. We cannot assure you that these markets will grow or that underlying real estate fundamentals will be favorable to owners and operators of office, retail, or multifamily properties. Our operations may also be adversely affected if competing properties are built in these markets. Moreover, submarkets within any of our target markets may be dependent upon a limited number of industries. Any adverse economic or real estate developments in our markets, or any decrease in demand for office, retail or multifamily space resulting from the regulatory environment, business climate or energy or fiscal problems, could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to satisfy our debt service obligations.  


We have a substantial amount of indebtedness outstanding, which may expose us to the risk of default under our debt obligations and may include covenants that restrict our ability to pay distributions to our stockholders.
 
As of December 31, 2017,2020, we had total debt outstanding of approximately $517.3$963.8 million, including amounts drawn under our credit facility, a substantial portion of which is guaranteed by our Operating Partnership, and we may incur significant additional debt to finance future acquisition and development activities. Excluding unamortized fair value adjustments and debt issuance costs, the aggregate outstanding principal balance of our debt was $523.4$962.8 million as of December 31, 2017, of which $77.7 million is scheduled to mature in 2018.2020. Payments of principal and interest on borrowings may leave us with insufficient cash resources to operate our properties or to pay the dividends currently contemplated or necessary to maintain our REIT qualification. Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following:  


•our cash flow may be insufficient to meet our required principal and interest payments;

•we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs;

•we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;

•we may be forced to dispose of one or more of our properties, possibly on unfavorable terms or in violation of certain covenants to which we may be subject;


•we may default on our obligations, in which case the lenders or mortgagees may have the right to foreclose on any properties that secure the loans or collect rents and other income from our properties;

•we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations or reduce our ability to pay, or prohibit us from paying, distributions to our stockholders; and

•our default under any loan with cross defaultcross-default provisions could result in a default on other indebtedness.
 
If any one of these events were to occur, our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations could be materially and adversely affected. Furthermore, foreclosures could create taxable income without accompanying cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code. See “Management’s"Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”"

The loss
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Our retail shopping center properties typically are anchored by large, nationally recognized tenants. As of December 31, 2017, Kroger/Harris Teeter, Home Depot, Regal Cinemas, and Bed Bath & Beyond collectively represented approximately 21.6%, and individually represented 11.0%, 4.2%, 3.2% and 3.2%, respectively, of the total annualized base rent in our retail portfolio. In addition, several of our retail properties are single-tenant properties or are occupied primarily by a single tenant. As of December 31, 2017, the Courthouse 7-Eleven, Tyre Neck Harris Teeter, and Harrisonburg Regal retail properties in our portfolio were 100% occupied by 7-Eleven, Harris Teeter and Regal Cinemas, respectively, and the Dick’s at Town Center, Sandbridge Commons, Perry Hall Marketplace, and Studio 56 retail properties were approximately 81%, 77%, 74% and 69% occupied by Dick’s Sporting Goods, Harris Teeter, Safeway and McCormick & Schmick’s, respectively. At any time, our tenants may experience a downturn in their businesses that may significantly weaken their financial condition. As a result, our tenants, including our anchor and other major tenants, may fail to comply with their contractual obligations to us, seek concessions in order to continue operations or declare bankruptcy, any of which could result in the termination of such tenants’ leases and the loss of rental income attributable to the terminated leases. In addition, certain of our tenants may cease operations while continuing to pay rent, which could decrease customer traffic, thereby decreasing sales for our other tenants at the applicable retail property. Furthermore, mergers or consolidations among retail establishments could result in the closure of existing stores or duplicate or geographically overlapping store locations, which could include stores at our retail properties.  
Loss of, or a store closure by, an anchor or major tenant could significantly reduce our occupancy level or the rent we receive from our retail properties, and we may not have the right, or otherwise may be unable, to re-lease the vacated space at attractive rents or at all. Moreover, in the event of default by a major tenant or anchor store, we may experience delays and costs in enforcing our rights as landlord to recover amounts due to us under the terms of our agreements with those parties. The occurrence of any of the situations described above, particularly if it involves an anchor tenant with leases in multiple locations, could seriously harm our performance and could adversely affect the value of the affected retail property.
In the event that any of the anchor stores, major tenants or single-tenant property tenants in our retail properties do not renew their leases with us when they expire, we may be unable to re-lease such premises at market rents or at all, which could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to satisfy our debt service obligations.
We may be unable to renew leases, lease vacant space, or re-lease space on favorable terms or at all as leases expire, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
As of December 31, 2017,2020, approximately 5.3%4.7% of the square footage of the properties in our stabilized office and retail portfolios was available. Additionally, 6.4%2.1% and 10.5%3.7% of the annualized base rent in our office portfolio was scheduled to expire in 20182021 and 2019,2022, respectively, and 6.5%6.9% and 17.4%9.5% of the annualized base rent in our retail portfolio was scheduled to expire in 20182021 and 2019,2022, respectively. We cannot assure you that new leases will be entered into, that leases will be renewed, or that our properties will be re-leased at net effective rental rates equal to or above the current average net effective rental rates or that substantial rent abatements, tenant improvements, early termination rights or below-market renewal options will not be offered to attract new tenants or retain existing tenants. In addition, our ability to lease our multifamily properties at favorable rates, or at all, may be adversely affected by the increase in supply of multifamily properties in our target markets. Our ability

to lease our properties depends upon the overall level of spending in the economy, which is adversely affected by, among other things, job losses and unemployment levels, fears of a recession, personal debt levels, the housing market, stock market volatility, and uncertainty about the future. If rental rates for our properties decrease, our existing tenants do not renew their leases, or we do not re-lease a significant portion of our available space and space for which leases expire, our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations could be materially and adversely affected.  


The short-term leases in our multifamily portfolio expose us to the effects of declining market rents, which could adversely affect our results of operations, cash flow and cash available for distribution.


Substantially all of the leases in our multifamily portfolio are for terms of 12 months or less. As a result, even if we are able to renew or re-lease apartment and student housing units as leases expire, our rental revenues will be impacted by declines in market rents more quickly than if all of our leases had longer terms, which could adversely affect our results of operations, cash flow, and cash available for distribution.


Competition for property acquisitions and development opportunities may reduce the number of opportunities available to us and increase our costs, which could have a material adverse effect on our growth prospects.
 
The current market for property acquisitions and development opportunities continues to be extremely competitive. This competition may increase the demand for the types of properties in which we typically invest and, therefore, reduce the number of suitable investment opportunities available to us and increase the purchase prices for such properties in the event we are able to acquire or develop such properties. We face significant competition for attractive investment opportunities from an indeterminate number of investors, including publicly traded and privately held REITs, private equity investors, and institutional investment funds, some of which have greater financial resources than we do, a greater ability to borrow funds to make investments in properties than we do, and the ability to accept more risk than we can prudently manage, including risks with respect to the geographic proximity of investments and the payment of higher acquisition prices. This competition will increase if investments in real estate become more attractive relative to other forms of investment. If the level of competition for investment opportunities is significant in our target markets, it could have a material adverse effect on our growth prospects. 


Increased competition and increased affordability of residential homes could limit our ability to retain our residents, lease apartment units, or increase or maintain rents at our multifamily apartment communities.


Our multifamily apartment communities compete with numerous housing alternatives in attracting residents, including other multifamily apartment communities and single-family rental units, as well as owner-occupied single-family and multifamily units. Competitive housing in a particular area and an increase in affordability of owner-occupied single-family and multifamily units due to, among other things, declining housing prices, oversupply, mortgage interest rates, and tax incentives and government programs to promote home ownership, could adversely affect our ability to retain residents, lease apartment units, and increase or maintain rents at our multifamily properties, which could adversely impact our results of operations, cash flow, and cash available for distribution.
 
The failure of properties that we develop or acquire in the future to meet our financial expectations could have a material adverse effect on us, including our financial condition, results of operations, cash flow, cash available for distribution, ability to service our debt obligations, the per share trading price of our common stock, and growth prospects.
 
Our future acquisitions and development projects and our ability to successfully operate these properties may be exposed to the following significant risks, among others:


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•we may acquire or develop properties that are not accretive to our results upon acquisition, and we may not successfully manage and lease those properties to meet our expectations;

•our cash flow may be insufficient to enable us to pay the required principal and interest payments on the debt secured by the property;

•we may spend more than budgeted amounts to make necessary improvements or renovations to acquired properties or to develop new properties;

•we may be unable to quickly and efficiently integrate new acquisitions or developed properties into our existing operations;


•market conditions may result in higher than expectedhigher-than-expected vacancy rates and lower than expected rental rates; and

•we may acquire properties subject to liabilities without any recourse, or with only limited recourse, with respect to unknown liabilities such as liabilities for clean-up of undisclosed environmental contamination, claims by tenants, vendors, or other persons dealing with the former owners of the properties, liabilities incurred in the ordinary course of business, and claims for indemnification by general partners, directors, officers, and others indemnified by the former owners of the properties.
 
If we cannot operate acquired or developed properties to meet our financial expectations, our financial condition, results of operations, cash flow, cash available for distribution, ability to service our debt obligations, the per share trading price of our common stock, and growth prospects could be materially and adversely affected.


Failure to succeed in new markets may limit our growth.
We have acquired in the past, and we may acquire in the future if appropriate opportunities arise, properties that are outside of our primary markets. Entering into new markets exposes us to a variety of risks, including difficulty evaluating local market conditions and local economies, developing new business relationships in the area, competing with other companies that already have an established presence in the area, hiring and retaining key personnel, evaluating quality tenants in the area, and a lack of familiarity with local governmental and permitting procedures. Furthermore, expansion into new markets may divert management time and other resources away from our current primary markets. As a result, we may not be successful in expanding into new markets, which could adversely impact our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
We depend onMezzanine loans and similar loan investments are subject to significant tenants in certain of our office properties,risks, and an inabilitylosses related to pay rent by any of these tenantsinvestments could result inhave a material decrease in our rental income, which would have an adverse effect on our financial condition and results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.operations.
 
    We have originated, and in the future expect to originate or acquire, mezzanine or similar loans, which take the form of subordinated loans secured by second mortgages on the underlying property or loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property. As of December 31, 2017,2020, we had approximately $128.6 million in outstanding mezzanine loans or similar investments. These types of loans involve a higher degree of risk than long-term senior mortgage loans secured by income-producing real property because the top ten largest tenantsloan may become unsecured as a result of foreclosure by the senior lender. In addition, these loans may have higher loan-to-value ratios than conventional mortgage loans, with little or no equity invested by the borrower, increasing the risk of loss of principal. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our office portfolio collectively accounted for approximately 50.6%mezzanine loan will be satisfied only after the senior debt is paid in full. In the event of a bankruptcy of the total annualized base rent in our office portfolio. Furthermore, Clark Nexsen, Hampton University, and Mythics accounted for 12.7%, 5.3%, and 5.3%, respectively,entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the total annualized base rententity may not be sufficient to satisfy our mezzanine loan. As a result, we may not recover some or all of our initial investment. Additionally, in conjunction with certain mezzanine loans, we issue partial payment guarantees to the senior lender for the property, which may require us to make payments to the senior lender in the event of a default on the senior note. Finally, in connection with our office portfolio asloan investments, we may have options to purchase all or a portion of December 31, 2017. The inabilitythe underlying property upon maturity of thesethe loan; however, if a developer’s costs for a project are higher than anticipated, exercising such options may not be attractive or other significant tenantseconomically feasible, or we may not have sufficient funds to pay rentexercise such options even if we desire to do so. Significant losses related to mezzanine or renew their leases upon expirationsimilar loan investments could materially and adversely affect the income produced by our office properties, which would have ana material adverse effect on our financial condition and results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.operations.


A bankruptcy or insolvency of any of our significant tenants in our office or retail properties could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
If a significant tenant in our office or retail properties becomes bankrupt or insolvent, federal law may prohibit us from evicting such tenant based solely upon such bankruptcy or insolvency. In addition, a bankrupt or insolvent tenant may be authorized to reject and terminate its lease with us. Any claim against such tenant for unpaid, future rent would be subject to a
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statutory cap that might be substantially less than the remaining rent owed under the lease. If any of these tenants were to experience a downturn in its business or a weakening of its financial condition resulting in its failure to make timely rental payments or causing it to default under its lease, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment. In many cases, we may have made substantial initial investments in the applicable leases through tenant improvement allowances and other concessions that we may not be able to recover. Any such event could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
Certain of the leases at our retail properties contain “co-tenancy” or “go-dark” provisions, which, if triggered, may allow tenants to pay reduced rent, cease operations or terminate their leases, any of which could materially and adversely affect our performance or the value of the affected retail property.
Certain of the leases at our retail properties contain “co-tenancy” provisions that condition a tenant’s obligation to remain open, the amount of rent payable by the tenant or the tenant’s obligation to continue occupancy on certain conditions, including: (i) the presence of a certain anchor tenant or tenants, (ii) the continued operation of an anchor tenant’s store and (iii) minimum occupancy levels at the retail property. If a co-tenancy provision is triggered by a failure of any of these or other applicable conditions, a tenant could have the right to cease operations, to terminate its lease early or to reduce its rent. In periods of prolonged economic decline, there is a higher than normal risk that co-tenancy provisions will be triggered as there

is a higher risk of tenants closing stores or terminating leases during these periods. In addition to these co-tenancy provisions, certain of the leases at our retail properties contain “go-dark” provisions that allow the tenant to cease operations while continuing to pay rent. This could result in decreased customer traffic at the affected retail property, thereby decreasing sales for our other tenants at that property, which may result in our other tenants being unable to pay their minimum rents or expense recovery charges. These provisions also may result in lower rental revenue generated under the applicable leases. To the extent co-tenancy or go-dark provisions in our retail leases result in lower revenue, tenant sales, tenants’ rights to terminate their leases early, or a reduction of their rent, our revenues and the value of the affected retail property could be materially and adversely affected.
Our dependence on smaller businesses, particularly in our retail portfolio, to rent our space could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
Many of our tenants, particularly those that lease space in our retail properties are smaller businesses that generally do not have the financial strength or resources of larger corporate tenants. In particular, 208 of our retail leases (representing approximately 13% of our annualized base rent from retail properties as of December 31, 2017) lease 2,500 or less square feet from us, and many of those tenants are smaller independent businesses, which generally experience a higher rate of failure than larger businesses. As a result of our dependence on these smaller businesses, we could experience a higher rate of tenant defaults, turnover and bankruptcies, which could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
Many of our operating costs and expenses are fixed and will not decline if our revenues decline.
 
Our results of operations depend, in large part, on our level of revenues, operating costs, and expenses. The expense of owning and operating a property is not necessarily reduced when circumstances such as market factors and competition cause a reduction in revenue from the property. As a result, if revenues decline, we may not be able to reduce our expenses to keep pace with the corresponding reductions in revenues. Many of the costs associated with real estate investments, such as real estate taxes, insurance, loan payments, and maintenance generally will not be reduced if a property is not fully occupied or other circumstances cause our revenues to decrease, which could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.


Adverse conditions in the general retail environment could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
Approximately 56%37.7% of our total annualized base rent as of December 31, 20172020 is from retail properties. As a result, we are subject to factors that affect the retail sector generally as well as the market for retail space. The retail environment and the market for retail space have been, and in the future could be, adversely affected by the COVID-19 pandemic and measures intended to mitigate its spread, weakness in the national, regional, and local economies, the level of consumer spending and consumer confidence, the adverse financial condition of some large retail companies, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets, and increasing competition from discount retailers, outlet malls, internet retailers, and other online businesses. Increases in consumer spending via the internet may significantly affect our retail tenants’ ability to generate sales in their stores. New and enhanced technologies, including new digital technologies and new web services technologies, may increase competition for certain of our retail tenants.
 
Any of the foregoing factors could adversely affect the financial condition of our retail tenants and the willingness of retailers to lease space in our retail properties.properties, including the anchor stores or major tenants in our retail shopping center properties, the loss of which could result in a material impact on our retail tenants. In turn, these conditions could negatively affect market rents for retail space and could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
Increases in interest rates, or failure to hedge effectively against interest rate changes, will increase our interest expense and may adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to pay distributions.service our debt obligations.
 
We have incurred, and may in the future incur, additional indebtedness that bears interest at a variable rate. An increase in interest rates would increase our interest expense and increase the cost of refinancing existing debt and issuing new debt, which would adversely affect our cash flow and ability to make distributions to our stockholders. In addition, to the extent we are unable to refinance debt when it becomes due, we will have fewer debt guarantee opportunities available to offer under our tax protection agreements, which could trigger an obligation to indemnify certain parties under the applicable tax protection agreements. Furthermore, if we need to repay existing debt during periods of rising interest rates, we could be required to

liquidate one or more of our investments at times that may not permit realization of the maximum return on such investments. The effect of prolonged interest rate increases could adversely impact our ability to make acquisitions and develop properties.
    
Subject to maintaining our qualification as a REIT, we expect to continue to enter into hedging transactions to protect us from the effects of interest rate fluctuations on floating rate debt. Our existing hedging transactions have included, and future hedging transactions may include, entering into interest rate cap agreements or interest rate swap agreements, which involve risk. Our failure to hedge effectively against interest rate changes may adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.

The phase-out of LIBOR and transition to SOFR as a benchmark interest rate could have adverse effects.

    The interest rate on our variable rate debt is based on LIBOR (the London Inter-Bank Offered Rate). In 2018, the Alternative Reference Rate Committee identified the Secured Overnight Financing Rate (“SOFR”) as the alternative to LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities, published by the
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Federal Reserve Bank of New York. By the end of 2021, it is expected that no new contracts will reference LIBOR and will instead use SOFR. Due to the broad use of LIBOR as a reference rate, all financial market participants, including us, are impacted by the risks associated with this transition and, therefore, it could adversely affect our operations and cash flows.
Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt.
 
Mortgage and other secured debt obligations increase our risk of property losses because defaults on indebtedness secured by properties may result in foreclosure actions initiated by lenders and ultimately our loss of the property securing any loans for which we are in default. Any foreclosure on a mortgaged property or group of properties could adversely affect the overall value of our portfolio of properties. For tax purposes, a foreclosure on any of our properties that is subject to a nonrecourse mortgage loan would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code. Foreclosures could also trigger our tax indemnification obligations under the terms of our tax protection agreements with respect to the sales of certain properties.

Most of our debt arrangements involve balloon payment obligations, which may materially and adversely affect our financial condition, cash flow, cash available for distribution, and ability to service our debt obligations.
Most of our debt arrangements require us to make a lump-sum or “balloon” payment at maturity. Our ability to make a balloon payment at maturity is uncertain and may depend upon our ability to obtain additional financing or our ability to sell the property. At the time the balloon payment is due, we may or may not be able to refinance the existing financing on terms as favorable as the original loan or sell the property at a price sufficient to make the balloon payment. In addition, balloon payments and payments of principal and interest on our indebtedness may leave us with insufficient cash to pay the distributions that we are required to pay to maintain our qualification as a REIT. Any of these factors may materially and adversely affect our financial condition, cash flow, cash available for distribution, and ability to service our debt obligations.

Our credit facility restricts our ability to engage in certain business activities, including our ability to incur additional indebtedness, make capital expenditures, and make certain investments.
 
Our credit facility contains customary negative covenants and other financial and operating covenants that, among other things:


•restrict our ability to incur additional indebtedness;

•restrict our ability to incur additional liens;

•restrict our ability to make certain investments (including certain capital expenditures);

•restrict our ability to merge with another company;

•restrict our ability to sell or dispose of assets;

•restrict our ability to make distributions to our stockholders; and

•require us to satisfy minimum financial coverage ratios, minimum tangible net worth requirements, and maximum leverage ratios.
 
These limitations restrict our ability to engage in certain business activities, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations. In addition, our credit facility may contain specific cross-default provisions with respect to specified other indebtedness, giving the lenders the right, in certain circumstances, to declare a default if we are in default under other loans.
 

Adverse economic and geopolitical conditions and dislocations in the credit markets could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
Our business has been, and may in the future be, affected by market and economic challenges experienced by the U.S. economy or the real estate industry as a whole.whole, including as a result of the COVID-19 pandemic and measures intended to mitigate its spread. Such conditions may materially and adversely affect us as a result of the following potential consequences, among others: 


•decreased demand for office, retail and multifamily space, which would cause market rental rates and property values to be negatively impacted;

•reduced values of our properties may limit our ability to dispose of assets at attractive prices or obtain debt financing secured by our properties and may reduce the availability of unsecured loans;

•our ability to obtain financing on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from our acquisition and development activities, and increase our future debt service expense; and

•one or more lenders under our credit facility could refuse to fund their financing commitment to us or could otherwise fail to do so, and we may not be able to replace the financing commitment of any such lenders on favorable terms or at all.
 
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If the U.S. economy experiences an economic downturn, we may see increases in bankruptcies and defaults by our tenants, and we may experience higher vacancy rates and delays in re-leasing vacant space, which could negatively impact our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
FailureA cybersecurity incident or other technology disruptions could negatively impact our business, our relationships, and our reputation.

    We use computers and computer networks in most aspects of our business operations. We also use mobile devices to hedge effectively against interest rate changescommunicate with our employees, suppliers, business partners, and tenants. These devices are used to transmit sensitive and confidential information including financial and strategic information about us, employees, business partners, tenants, and other individuals and organizations. Additionally, we utilize third-party service providers that host personally identifiable information and other confidential information of our employees, business partners, tenants, and others. We also maintain confidential financial and business information regarding us and persons and entities with which we do business on our information technology systems. We have in the past experienced cyberattacks on our computers and computer networks, and, while none to date have been material, we expect that additional cyberattacks will occur in the future. The theft, destruction, loss, or release of sensitive and confidential information or operational downtime of the systems used to store and transmit our or our tenants’ confidential business information could result in disruptions to our business, negative publicity, brand damage, violation of privacy laws, financial liability, difficulty attracting and retaining tenants, loss of business partners, and loss of business opportunities, any of which may materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.

Subject to maintainingAny material weakness in our qualification as a REIT, we expect to continue to enter into hedging transactions to protect us frominternal control over financial reporting could have an adverse effect on the effectstrading price of interest rate fluctuations on floating rate debt. Our existing hedging transactions have included, and future hedging transactions may include, entering into interest rate cap agreements or interest rate swap agreements. These agreements involve risks, such as the risk that (i) such arrangements would not be effective in reducing our exposure to interest rate changes, (ii) a court could rule that such agreements are not legally enforceable, (iii) hedging could actually increase our costs and reduce the overall returns on our investments, as interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates, (iv) counterparties to such arrangements would not perform, (v) we could incur significant costs associated with the settlement of the agreements, or (vi) the underlying transactions could fail to qualify as highly-effective cash flow hedges under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging. Our failure to hedge effectively against interest rate changes may adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations. common stock.
 
We will continue to incur costs as a result of being a public company, and such costs may increase when we cease to be an “emerging growth company.”
As a public company, we expect to continue to incur significant legal, accounting, insurance and other expenses that we did not incur as a private company, including costs associated with public company reporting requirements. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect compliance with these public reporting requirements and associated rules and regulations to increase expenses, particularly after we are no longer an emerging growth company, although we are currently unable to estimate these costs with any degree of certainty. We will lose our status as an emerging growth company as of December 31, 2018, which    Management is the last day of the fiscal year after the fifth anniversary of our initial public offering, which could result in our incurring additional costs applicable to public companies that are not emerging growth companies. 
We will be required to have an independent auditor assess the effectiveness of our internal control over financial reporting, when we cease to be an "emerging growth company."
As of December 31, 2018, we will no longer be an emerging growth company under the Jumpstart Our Business Startups Act ("JOBS Act"), and management will be required to have an independent auditor assess the effectiveness of our

internal control over financial reporting, pursuant to Section 404 of the Sarbanes-Oxley Act. Substantial work on our part is required to implement appropriate processes, document the system of internal control over key processes, assess their design, remediate any deficiencies identified and test their operation. This process is expected to be both costly and challenging. We cannot give any assurances that material weaknesses will not be identified in the future in connection with our compliance with the provisions of Section 404 of the Sarbanes-Oxley Act. The existence of any material weakness described above would preclude a conclusion by management and our independent auditors that we maintained effective internal control over financial reporting. Our management may be required to devote significant time and expense to remediate any material weaknesses that may be discovered and may not be able to remediate anysuch material weaknessweaknesses in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations, and cause investors to lose confidence in our reported financial information, any of which could lead to a decline in the per share trading price of our common stock.


We may be required to make rent or other concessions or significant capital expenditures to improve our properties in order to retain and attract tenants, which may materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
Upon expiration of our leases to our tenants, we may be required to make rent or other concessions, accommodate requests for renovations, build-to-suit remodeling, and other improvements, or provide additional services to our tenants, any of which would increase our costs. As a result, we may have to make significant capital or other expenditures in order to retain tenants whose leases expire and to attract new tenants in sufficient numbers. Additionally, we may need to raise capital to make such expenditures. If we are unable to do so or capital is otherwise unavailable, we may be unable to make the required expenditures. This could result in non-renewals by tenants upon expiration of their leases. If any of the foregoing were to occur, it could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
Our use of units in our Operating Partnership as currency to acquire properties could result in stockholder dilution or limit our ability to sell such properties, which could have a material adverse effect on us.
 
We have acquired, and in the future may acquire, properties or portfolios of properties through tax deferred contribution transactions in exchange for OP Units. This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we could deduct over the tax life of the acquired properties and may requirerequiring that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties or the allocation of partnership debt to the contributors to maintain their tax bases. These restrictions also could limit our ability to sell properties at a time, or on terms, that would be favorable absent such restrictions. In addition, future issuances of OP Units would reduce our ownership percentage in our Operating Partnership and affect the amount of distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to our
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stockholders. To the extent that our stockholders do not directly own OP Units, our stockholders will not have any voting rights with respect to any such issuances or other partnership level activities of our Operating Partnership.

Significant competition in the leasing market could have a material adverse effect on us, including our financial condition, results of operations, cash flow, cash available for distribution and our ability to service our debt obligations.
We compete with numerous developers, owners and operators of real estate, many of which own properties similar to ours in the same submarkets in which our properties are located. If our competitors offer space at rental rates below current market rates, or below the rental rates we currently charge our tenants, we may lose existing or potential tenants and we may be pressured to reduce our rental rates below those we currently charge or to offer more substantial rent abatements, tenant improvements, early termination rights or below-market renewal options in order to retain tenants when our tenants’ leases expire. As a result, our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations could be materially and adversely affected.

Our success depends on key personnel whose continued service is not guaranteed, and the loss of one or more of our key personnel could adversely affect our ability to manage our business and to implement our growth strategies or could create a negative perception of our company in the capital markets.
 
Our continued success and our ability to manage anticipated future growth depend, in large part, upon the efforts of key personnel particularly Messrs. Hoffler (our Executive Chairman), Kirk (our Vice Chairman), Haddad (our President and Chief Executive Officer), Apperson (our President of Construction), O’Hara (our Chief Financial Officer and Treasurer), and Smith (our Chief Operating Officer, Chief Investment Officer and Corporate Secretary) and Ms. Hampton (our President of Asset Management), who have extensive market knowledge and relationships and exercise substantial influence over our

operational, financing, development, and construction activity. Among the reasons that these individuals are important to our success is thatIndividuals currently considered key personnel each has a national or regional industry reputation that attracts business and investment opportunities and assists us in negotiations with lenders, existing and potential tenants, and industry personnel. Wepersonnel, and we have not currently entered into employment agreements with any of these individuals. If we lose their services, our relationships with such industry personnel could diminish.
 
Many of our other senior executives also have extensive experience and strong reputations in the real estate industry, which aid us in identifying opportunities, having opportunities brought to us, and negotiating with tenants and build-to-suit prospects. The loss of services of one or more members of our senior management team, or our inability to attract and retain highly qualified personnel, could adversely affect our business, diminish our investment opportunities, and weaken our relationships with lenders, business partners, existing and prospective tenants, and industry participants, which could materially and adversely affect our financial condition, results of operations, cash flow, and the per share trading price of our common stock.

We may not be able to rebuild our existing properties to their existing specifications if we experience a substantial or comprehensive loss of such properties, including as a result of hurricanes or other disasters.

    In the event that we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications. For example, all but two of the properties in our portfolio as of December 31, 2020 are located in Maryland, Virginia, North Carolina, South Carolina, and Georgia, which are areas particularly susceptible to hurricanes. While we carry insurance on certain of our properties, the amount of our insurance coverage may not be sufficient to fully cover losses from hurricanes and will be subject to limitations involving large deductibles or co-payments. Further, reconstruction or improvement of properties would likely require significant upgrades to meet zoning and building code requirements. Environmental and legal restrictions could also restrict the rebuilding of our properties.

Joint venture investments could be materially and adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition, and disputes between us and our co-venturers.

    In the past, we have, and in the future, we expect to, co-invest with third parties through partnerships, joint ventures or other entities, acquiring noncontrolling interests in or sharing responsibility for developing properties and managing the affairs of a property, partnership, joint venture, or other entity. In particular, in connection with the formation transactions related to our initial public offering, we provided certain of the prior investors with the right to co-develop certain projects with us in the future and the right to acquire a minority equity interest in certain properties that we may develop in the future, in each case under certain circumstances and subject to certain conditions set forth in the applicable agreement. Furthermore, we are often a joint venture partner in development projects. In the event that we co-develop a property together with a third party, we would be required to share a portion of the development fee. With respect to any such arrangement or any similar arrangement that we may enter into in the future, we may not be in a position to exercise sole decision-making authority regarding the development, property, partnership, joint venture, or other entity.
    Investments in partnerships, joint ventures or other entities may, under certain circumstances, involve risks not present where a third party is not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions. Partners or co-venturers may have economic or other business interests or goals which are inconsistent with our business interests or goals and may be in a position to take actions contrary to our policies or objectives, and they may have competing interests in our markets that could create conflicts of interest. Such investments may also have the potential risk of impasses on decisions, such as a sale or financing, because neither we nor the partner(s) or co-venturer(s) would have full control over the partnership or joint venture. In addition, a sale or transfer by us to a third party of our interests in the joint venture may be subject to consent rights or rights of first refusal, in favor of our joint venture partners, which would in each case restrict our ability to dispose of our interest in the joint venture.

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    Where we are a limited partner or non-managing member in any partnership or limited liability company, if such entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our business. Consequently, actions by or disputes with partners or co-venturers might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers. Our joint ventures may be subject to debt and, during periods of volatile credit markets, the refinancing of such debt may require equity capital calls.  

Our growth depends on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all, which could limit our ability to, among other things, meet our capital and operating needs or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.
    In order to maintain our qualification as a REIT, we are required under the Code to, among other things, distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. In addition, we will be subject to income tax at regular corporate rates to the extent that we distribute less than 100% of our REIT taxable income, including any net capital gains. Because of these distribution requirements, we may not be able to fund future capital needs, including any necessary capital expenditures, from operating cash flow. Consequently, we intend to rely on third-party sources to fund our capital needs. We may not be able to obtain such financing on favorable terms or at all and any additional debt we incur will increase our leverage and likelihood of default. Our access to third-party sources of capital depends, in part, on: 

•general market conditions;
•the market’s perception of our growth potential;
•our current debt levels;
•our current and expected future earnings;
•our cash flow and cash distributions; and
•the market price per share of our common stock.
    If we cannot obtain capital from third-party sources, we may not be able to acquire or develop properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.

Expectations of our company relating to environmental, social and governance factors may impose additional costs and expose us to new risks.

There is an increasing focus from certain investors, tenants, employees, and other stakeholders concerning corporate responsibility, specifically related to environmental, social and governance factors. Some investors may use these factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies relating to corporate responsibility are inadequate. Third-party providers of corporate responsibility ratings and reports on companies have increased to meet growing investor demand for measurement of corporate responsibility performance. In addition, the criteria by which companies’ corporate responsibility practices are assessed may change, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria.  Alternatively, if we elect not to or are unable to satisfy such new criteria, investors may conclude that our policies with respect to corporate responsibility are inadequate. We may face reputational damage in the event that our corporate responsibility procedures or standards do not meet the standards set by various constituencies. Furthermore, if our competitors’ corporate responsibility performance is perceived to be greater than ours, potential or current investors may elect to invest with our competitors instead. In addition, in the event that we communicate certain initiatives and goals regarding environmental, social and governance matters, we could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could be criticized for the scope of such initiatives or goals.  If we fail to satisfy the expectations of investors, tenants and other stakeholders or our initiatives are not executed as planned, our reputation and financial results could be materially and adversely affected.

We may be subject to ongoing or future litigation, including existing claims relating to the entities that owned the properties prior to our initial public offering and otherwise in the ordinary course of business, which could have a material adverse effect on our financial condition, results of operations, cash flow, the per share trading price of our common stock, cash available for distribution, and ability to service our debt obligations.

We may be subject to ongoing or future litigation, including existing claims relating to the entities that owned the properties and operated the businesses prior to our initial public offering and otherwise in the ordinary course of business. Some
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of these claims may result in significant defense costs and potentially significant judgments against us, some of which are not, or cannot be, insured against. We generally intend to vigorously defend ourselves. However,ourselves; however, we cannot be certain of the ultimate outcomes of currently asserted claims or of those that may arise in the future. In addition, we may become subject to litigation in connection with the formation transactions related to our initial public offering in the event that prior investors dispute the valuation of their respective interests, the adequacy of the consideration received by them in the formation transactions or the interpretation of the agreements implementing the formation transactions. Resolution of these types of matters against us may result in our having to pay significant fines, judgments, or settlements, which, if uninsured, or if the fines, judgments, and settlements exceed insured levels, could adversely impact our earnings and cash flow, thereby having an adverse effect on our financial condition, results of operations, cash flow, the per share trading price of our common stock, cash available for distribution, and ability to service our debt obligations. Certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could materially and adversely affect our results of operations and cash flow, expose us to increased risks that would be uninsured, and adversely impact our ability to attract officers and directors.

Potential losses from hurricanes in Virginia, Maryland, North Carolina and South Carolina may not be covered by insurance. 
All but two of the properties in our portfolio as of December 31, 2017 are located in Virginia, Maryland, North Carolina and South Carolina, which are areas particularly susceptible to hurricanes. While we carry insurance on certain of our properties, the amount of our insurance coverage may not be sufficient to fully cover losses from hurricanes and will be subject to limitations involving large deductibles or co-payments. In addition, we may reduce or discontinue insurance on some or all of our properties in the future if the cost of premiums for any such policies exceeds, in our judgment, the value of the coverage discounted for the risk of loss. As a result, in the event of a hurricane, we may be required to incur significant costs, and, to the extent that a loss exceeds policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged.  
We may not be able to rebuild our existing properties to their existing specifications if we experience a substantial or comprehensive loss of such properties.
In the event that we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications. Further, reconstruction or improvement of such a property would likely require significant upgrades to meet zoning and building code requirements. Environmental and legal restrictions could also restrict the rebuilding of our properties.

Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers.
In the past, we have, and in the future, we expect to, co-invest with third parties through partnerships, joint ventures or other entities, acquiring noncontrolling interests in or sharing responsibility for developing properties and managing the affairs of a property, partnership, joint venture or other entity. In particular, in connection with the formation transactions related to our initial public offering, we provided certain of the prior investors with the right to co-develop certain projects with us in the future and the right to acquire a minority equity interest in certain properties that we may develop in the future, in each case under certain circumstances and subject to certain conditions set forth in the applicable agreement. Furthermore, as of December 31, 2017, we were 70%, 65%, 80%, 92.5%, 90%, and 37% joint venture partners in our Lightfoot Marketplace, Brooks Crossing, Harding Place, 595 King Street, 530 Meeting Street, and City Center development projects, respectively. In the event that we co-develop a property together with a third party, we would be required to share a portion of the development fee. With respect to any such arrangement or any similar arrangement that we may enter into in the future, we may not be in a position to exercise sole decision-making authority regarding the development, property, partnership, joint venture or other entity. Investments in partnerships, joint ventures or other entities may, under certain circumstances, involve risks not present where a third party is not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions. Partners or co-venturers may have economic or other business interests or goals which are inconsistent with our business interests or goals and may be in a position to take actions contrary to our policies or objectives, and they may have competing interests in our markets that could create conflicts of interest. Such investments may also have the potential risk of impasses on decisions, such as a sale or financing, because neither we nor the partner(s) or co-venturer(s) would have full control over the partnership or joint venture. In addition, a sale or transfer by us to a third party of our interests in the joint venture may be subject to consent rights or rights of first refusal, in favor of our joint venture partners, which would in each case restrict our ability to dispose of our interest in the joint venture. Where we are a limited partner or non-managing member in any partnership or limited liability company, if such entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our business. Consequently, actions by or disputes with partners or co-venturers might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers. Our joint ventures may be subject to debt and, during periods of volatile credit markets, the refinancing of such debt may require equity capital calls.  
Mezzanine loans and similar loan investments are subject to significant risks, and losses related to these investments could have a material adverse effect on our financial condition and results of operations. 
We have originated, and may in the future originate or acquire, mezzanine or similar loans, which take the form of subordinated loans secured by second mortgages on the underlying property or loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property. These types of loans involve a higher degree of risk than long-term senior mortgage loans secured by income-producing real property because the loan may become unsecured as a result of foreclosure by the senior lender. In addition, these loans may have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt is paid in full. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. As a result, we may not recover some or all of our initial investment. In addition, in connection with our loan investments, we may have options to purchase all or a portion of the underlying property upon maturity of the loan; however, if a developer’s costs for a project are higher than anticipated, exercising such options may not be attractive or economically feasible, or we may not have sufficient funds to exercise such options even if we desire to do so. Significant losses related to mezzanine or similar loan investments could have a material adverse effect on our financial condition and results of operations.

Our growth depends on external sources of capital that are outside of our control and may not be available to us on commercially reasonable terms or at all, which could limit our ability to, among other things, meet our capital and operating needs or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.
In order to maintain our qualification as a REIT, we are required under the Code to, among other things, distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. In addition, we will be subject to income tax at regular corporate rates to the extent that we distribute less than 100% of our REIT taxable income, including any net capital gains. Because of these distribution requirements, we may not be able to fund future capital needs, including any necessary capital expenditures, from operating cash flow. Consequently, we

intend to rely on third-party sources to fund our capital needs. We may not be able to obtain such financing on favorable terms or at all and any additional debt we incur will increase our leverage and likelihood of default. Our access to third-party sources of capital depends, in part, on: 

general market conditions;

the market’s perception of our growth potential;

our current debt levels;

our current and expected future earnings;

our cash flow and cash distributions; and

the market price per share of our common stock.
If we cannot obtain capital from third-party sources, we may not be able to acquire or develop properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.

We may not be able to sustain our growth rate level.

Since our inception, we have achieved significant growth in our portfolio and results of operations. We may not be able to sustain this level of growth, and over time we may experience a decline in our growth rate as a result of various factors, including our ability to successfully acquire and develop retail, office and multifamily properties, changes in the economic and other conditions in geographic markets in which we conduct business, changes in the real estate market generally, the competitiveness of the real estate market and the other risks discussed in this section, which could adversely affect the market price of our common stock.

Risks Related to Our Third-Party Construction Business
 
Adverse economic and regulatory conditions, particularly in the Mid-Atlantic region, could adversely affect our construction and development business, which could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
Our third-party construction activities have been, and are expected to continue to be, primarily focused in the Mid-Atlantic region, although we have also historically undertaken construction projects in various states in the Southeast, Northeast, and Midwest regions of the United States.U.S. As a result of our concentration of construction projects in the Mid-Atlantic region of the United States,U.S., we are particularly susceptible to adverse economic or other conditions in markets in this marketregion (such as periods of economic slowdown or recession, business layoffs or downsizing, industry slowdowns, relocations of businesses, labor disruptions, and the costs of complying with governmental regulations or increased regulation), as well as to natural disasters that occur in this region. We cannot assure you that our target markets will support construction and development projects of the type in which we typically engage. While we have the ability to provide a wide range of development and construction services, any adverse economic or real estate developments in the Mid-Atlantic region could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
There can be no assurance that all of the projects for which our construction business is engaged as general contractor will be commenced or completed in their entirety in accordance with the anticipated cost, or that we will achieve the financial results we expect from the construction of such properties, which could materially and adversely affect our results of operations, cash flow, and growth prospects.
 
Our    For serving as general contractor, our construction business earns profit for serving as general contractor equal to the difference between the total construction fees that we charge and the costs that we incur to build a property. If the decision is made by a third-party client to abandon a construction project for any reason, our anticipated fee revenue from such project could be significantly lower than we expect. In addition, we defer pre-contract costs when such costs are directly associated with specific anticipated construction contracts and their recovery is deemed probable. In the event that we determine that the execution of a construction contract is no longer probable, we would be required to expense those pre-contract costs in the period in which such determination is made, which could materially and adversely affect our results of operations in such period. Our ability to

complete the projects in our construction pipeline on time and on budget could be materially and adversely affected as a result of the following factors, among others: 


•shortages of subcontractors, equipment, materials, or skilled labor;

•unscheduled delays in the delivery of ordered materials and equipment;

•unanticipated increases in the cost of equipment, labor, and raw materials;

•unforeseen engineering, environmental, or geological problems;

•weather interferences;

•difficulties in obtaining necessary permits or in meeting permit conditions;

•client acceptance delays; or

•work stoppages and other labor disputes.
 
If we do not complete construction projects on time and on budget, it could have a material adverse effect on us, including our results of operations, cash flow, and growth prospects.
 
Our dependence
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We recognize revenue for the majority of our construction projects based on third-party subcontractorsestimates; therefore, variations of actual results from our assumptions may reduce our profitability.

In accordance with United States generally accepted accounting principles, we record revenue as work on the contract progresses. The cumulative amount of revenues recorded on a contract at a specified point in time is that percentage of total estimated revenues that costs incurred to date bear to estimated total costs. Accordingly, contract revenues and equipmenttotal cost estimates are reviewed and material providersrevised as the work progresses. Adjustments are reflected in contract revenues in the period when such estimates are revised. Estimates are based on management’s reasonable assumptions and experience, but are only estimates. Variations of actual results from assumptions on an unusually large project or on a number of average size projects could be material. We are also required to immediately recognize the full amount of the estimated loss on a contract when estimates indicate such a loss. Such adjustments and accrued losses could result in material shortages and project delays and could reduce our profits or result in project losses,reduced profitability, which could materially and adversely affect our financial condition, results of operations, and cash flow.
Because our construction business provides general contracting services, we rely on third-party subcontractors and equipment and material providers. For example, we procure equipment and construction materials as needed when engaged in large construction projects. To the extent that we cannot engage subcontractors or acquire equipment and materials at reasonable costs or if the amount we are required to pay for subcontractors or equipment exceeds our estimates, our ability to complete a construction project in a timely fashion or at a profit may be impaired. In addition, if a subcontractor or a manufacturer is unable to deliver its services, equipment or materials according to the negotiated terms for any reason, including the deterioration of its financial condition, we may be required to purchase the services, equipment or materials from another source at a higher price. Additionally, while our construction contracts generally provide that our obligation to pay subcontractors is expressly made subject to the condition precedent that we shall have first received payment, we cannot assure you that these so called “pay-if-paid” or “pay-when-paid” provisions will be recognized in all jurisdictions in which we do business, or that a subcontractor or payment bond surety may not otherwise be entitled to payment or to record a lien on the affected property. In such event, we may be required to pay a payment bond surety or the subcontractors we engage even though we have yet to receive our fees as general contractor. This may reduce the profit to be realized or result in a loss on a project for which the services, equipment or materials are needed, which may materially and adversely affect our financial condition, results of operations, and cash flow.
Our construction business recognizes certain revenue on a percentage-of-completion basis and upon the achievement of contractual milestones, and any delay or cancellation of a construction project could materially and adversely affectnegatively impact our cash flow and results offrom operations.
Our construction business recognizes certain revenue on a percentage-of-completion basis and, as a result, revenue from our construction business is driven by the performance of our contractual obligations. The percentage-of-completion method of accounting is inherently subjective because it relies on estimates of total project cost as a basis for recognizing revenue and profit. Accordingly, revenue and profit recognized under the percentage-of-completion method is potentially subject to adjustments in subsequent periods based on refinements in the estimated cost to complete a project, which could result in a reduction or reversal of previously recorded revenues and profits. In addition, delays in, or the cancellation of, any particular construction project could adversely impact our ability to recognize revenue in a particular period. Furthermore, changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income in the period in which they are determined. If any of the foregoing were to occur, it could have a material adverse effect on our cash flow and results of operations.


Construction project sites are inherently dangerous workplaces, and, as a result, our failure to maintain safe construction project sites could result in deaths or injuries, reduced profitability, the loss of projects or clients, and possible exposure to litigation, any of which could materially and adversely affect our financial condition, results of operations, cash flow, and reputation.
 
Construction and maintenance sites often put our employees, employees of subcontractors, our tenants, and members of the public in close proximity with mechanized equipment, moving vehicles, chemical and manufacturing processes, and highly regulated materials. On many sites, we are responsible for safety and, accordingly, must implement appropriate safety procedures. If we fail to implement these procedures or if the procedures we implement are ineffective, we may suffer the loss of or injury to our employees, or fines, or expose our tenants and members of the public to potential injury, thereby creating exposure to litigation. As a result, our failure to maintain adequate safety standards could result in reduced profitability or the loss of projects, clients, and tenants, which may materially and adversely affect our financial condition, results of operations, cash flow, and reputation.
 
Supply shortages and other risks associated with demand for skilled labor could increase construction costs and delay performance of our obligations under construction contracts, which could materially and adversely affect the profitability of our construction business, our cash flow, and our results of operations.
There is a high level of competition in the construction industry for skilled labor. Increased costs, labor shortages or other disruptions in the supply of skilled labor, such as carpenters, roofers, electricians and plumbers, could cause increases in construction costs and construction delays. We may not be able to pass on increases in construction costs because of market conditions or negotiated contractual terms. Sustained increases in construction costs due to competition for skilled labor and delays in performance under construction contracts may materially and adversely affect the profitability of our construction business, our cash flow, and results of operations.
Our failure to successfully and profitably bid on construction contracts could materially and adversely affect our results of operations and cash flow.
 
Many of the costs related to our construction business, such as personnel costs, are fixed and are incurred by us irrespective of the level of activity of our construction business. The success of our construction business depends, in part, on our ability to successfully and profitably bid on construction contracts for private and public sector clients. Contract proposals and negotiations are complex and frequently involve a lengthy bidding and selection process, which can be impacted by a number of factors, many of which are outside our control, including market conditions, financing arrangements, and required governmental approvals. If we are unable to maintain a consistent backlog of third-party construction contracts, our results of operations and cash flow could be materially and adversely affected.
 
If we fail to timely complete a construction project, miss a required performance standard, or otherwise fail to adequately perform on a construction project, we may incur losses or financial penalties, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, ability to service our debt obligations, and reputation.
 
We may contractually commit to a construction client that we will complete a construction project by a scheduled date at a fixed cost. We may also commit that a construction project, when completed, will achieve specified performance standards. If the construction project is not completed by the scheduled date or fails to meet required performance standards, we may either incur significant additional costs or be held responsible for the costs incurred by the client to rectify damages due to late completion or failure to achieve the required performance standards. In addition, completion of projects can be adversely affected by a number of factors beyond our control, including unavoidable delays from governmental inaction, public opposition, inability to obtain financing, weather conditions, unavailability of vendor materials, availabilities of subcontractors, changes in the project scope of services requested by our clients, industrial accidents, environmental hazards, labor disruptions, and other factors. In some cases, if we fail to meet required performance standards or milestone requirements, we may also be subject to agreed-upon financial damages in the form of liquidated damages, which are determined pursuant to the contract governing the construction project. To the extent that these events occur, the total costs of the project could exceed our estimates and our contracted cost and we could experience reduced profits or, in some cases, incur a loss on a project, which may materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations. Failure to meet performance standards or complete performance on a timely basis could also adversely affect our reputation.
 

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Unionization or work stoppages could have a material adverse effect on us.
 
From time to time, our construction business and the subcontractors we engage may use unionized construction workers, which requires us to pay the prevailing wage in a jurisdiction to such workers. Due to the highly labor-intensive and price-competitive nature of the construction business, the cost of unionization or prevailing wage requirements for new developments could be substantial, which could adversely affect our profitability. In addition, the use of unionized construction workers could cause us to become subject to organized work stoppages, which would materially and adversely affect our ability to meet our construction timetables and could significantly increase the cost of completing a construction project.

Risks Related to Our Development Business and Property Acquisitions
Our failure to establish new development relationships with public partners and expand our development relationships with existing public partners could have a material adverse effect on our results of operations, cash flow, and growth prospects.
Our growth strategy depends significantly on our ability to leverage our extensive experience in completing large, complex, mixed-use public/private projects to establish new relationships with public partners and expand our relationships with existing public partners. Future increases in our revenues may depend significantly on our ability to expand the scope of the work we do with the state and local government agencies with which we currently have partnered and attract new state and local government agencies to undertake public/private development projects with us. Our ability to obtain new work with state and local governmental authorities on new public/private development and financing partnerships could be adversely affected by several factors, including decreases in state and local budgets, changes in administrations, the departure of government personnel with whom we have worked, and negative public perceptions about public/private partnerships. In addition, to the extent that we engage in public/private partnerships in states or local communities in which we have not previously worked, we could be subject to risks associated with entry into new markets, such as lack of market knowledge or understanding of the local economy, lack of business relationships in the area, competition with other companies that already have an established presence in the area, difficulties in hiring and retaining key personnel, difficulties in evaluating quality tenants in the area, and unfamiliarity with local governmental and permitting procedures. If we fail to establish new relationships with public partners and expand our relationships with existing public partners, it could have a material adverse effect on our results of operations, cash flow, and growth prospects.
We may be unable to identify and complete development opportunities and acquisitions of properties that meet our investment criteria, which may materially and adversely affect our results of operations, cash flow, and growth prospects.
Our business and growth strategy involves the development and selective acquisition of office, retail and multifamily properties. We may expend significant management time and other resources, including out-of-pocket costs, in pursuing these investment opportunities. Our ability to complete development projects or acquire properties on favorable terms, or at all, may be exposed to the following significant risks: 

we may incur significant costs and divert management attention in connection with evaluating and negotiating potential development opportunities and acquisitions, including those that we are subsequently unable to complete;

agreements for the development or acquisition of properties are subject to conditions, which we may be unable to satisfy; and

we may be unable to obtain financing on favorable terms or at all.
If we are unable to identify attractive investment opportunities and successfully develop new properties, our results of operations, cash flow, and growth prospects could be materially and adversely affected.

The risks associated with land holdings and related activities could have a material adverse effect on our results of operations.
We hold options to acquire undeveloped parcels of land for future development and may in the future acquire additional land holdings for development. The risks inherent in purchasing, owning, and developing land increase as demand or rental rates for office, retail or multifamily properties decreases. Real estate markets are highly uncertain and volatile and, as a result, the value of undeveloped land has fluctuated significantly and may continue to fluctuate. In addition, carrying costs, including interest and other pre-development costs, can be significant and can result in losses or reduced profitability. If there are subsequent changes in the fair value of our undeveloped land holdings that cause us to determine that the fair value of our

undeveloped land holdings is less than their carrying basis reflected in our financial statements plus estimated costs to sell, we may be required to take future impairment charges which would reduce our net income and could materially and adversely affect our results of operations.
The success of our activities to design, construct and develop properties in which we will retain an ownership interest is dependent, in part, on the availability of suitable undeveloped land at acceptable prices as well as our having sufficient liquidity to fund investments in such undeveloped land and subsequent development.
Our success in designing, constructing and developing projects for our own account depends, in part, upon the continued availability of suitable undeveloped land at acceptable prices. The availability of undeveloped land for purchase at favorable prices depends on a number of factors outside of our control, including the risk of competitive over-bidding on land and governmental regulations that restrict the potential uses of land. If the availability of suitable land opportunities decreases, the number of development projects we may be able to undertake could be reduced. In addition, our ability to make land purchases will depend upon us having sufficient liquidity or access to external sources of capital to fund such purchases. Thus, the lack of availability of suitable land opportunities and insufficient liquidity to fund the purchases of any such available land opportunities could have a material adverse effect on our results of operations and growth prospects.

Our real estate development activities are subject to risks particular to development, such as unanticipated expenses, delays and other contingencies, any of which could materially and adversely affect our financial condition, results of operations, and cash flow.
We engage in development and redevelopment activities and will be subject to the following risks associated with such activities: 

unsuccessful development or redevelopment opportunities could result in direct expenses to us and cause us to incur losses;

construction or redevelopment costs of a project may exceed original estimates, possibly making the project less profitable than originally estimated, or unprofitable;

occupancy rates and rents of a completed project may not be sufficient to make the project profitable; and

the availability and pricing of financing to fund our development activities on favorable terms or at all.
These risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent completion of development or redevelopment activities once undertaken, any of which could have a material adverse effect on our financial condition, results of operations and cash flow.
There can be no assurance that all of the properties in our development pipeline will be completed in their entirety in accordance with the anticipated cost, or that we will achieve the results we expect from the development of such properties, which could materially and adversely affect our financial condition, results of operations, and growth prospects.
The development of the projects in our development pipeline is subject to numerous risks, many of which are outside of our control. The cost necessary to complete the development of our development pipeline could be materially higher than we anticipate. Because we generally intend to commence the construction phase of an office or retail project for our own account only where a substantial percentage of the commercial space is pre-leased, we could decide not to undertake construction on one or more of the projects in our development pipeline if our pre-leasing efforts are unsuccessful. Furthermore, if we are delayed in the completion of any development project, tenants may have the right to terminate pre-development leases, which could materially and adversely affect the financial viability of the project. In addition, even if we decide to commence construction on a project, we can provide no assurances that we will complete any of the projects in our development pipeline on the anticipated schedule, or that, once completed, the properties in our development pipeline will achieve the results that we expect. If the development of the projects in our development pipeline is not completed in accordance with our anticipated timing or at the anticipated cost, or the properties fail to achieve the financial results we expect, it could have a material adverse effect on our financial condition, results of operations, and growth prospects.
Our option properties are subject to various risks, and we may not be able to acquire them.
We have options to acquire from certain of our officers and directors certain parcels of developable land, which will expire on May 1, 2018 unless otherwise extended. These parcels are exposed to many of the same risks that may affect the

other properties in our portfolio. The terms of the option agreements relating to these parcels were not determined by arm’s-length negotiations, and such terms may be less favorable to us than those that may have been obtained through negotiations with third parties. In addition, it may become economically unattractive to exercise our options with respect to these parcels, which could cause us to decide not to exercise our option to purchase these parcels in the future. In such event, or in the event that the option agreements expire by their terms, the parcels could be sold to one of our competitors without restriction. Because our officers and directors own economic interests in these parcels, our decision to exercise or refrain from exercising such options will create conflicts of interest.
Risks Related to the Real Estate Industry
 
Our business is subject to risks associated with real estate assets and the real estate industry, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
Our ability to pay expected dividends to our stockholders depends on our ability to generate revenues in excess of expenses, scheduled principal payments on debt, and capital expenditure requirements. Events and conditions generally applicable to owners and operators of real property that are beyond our control may decrease cash available for distribution and the value of our properties. These events include many of the risks set forth above under “—"—Risks Related to Our Business, ,”" as well as the following: 


•oversupply or reduction in demand for office, retail, or multifamily space in our markets;

•adverse changes in financial conditions of buyers, sellers, and tenants of properties;

•vacancies or our inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights, or below-market renewal options, and the need to periodically repair, renovate, and re-lease space;

•increased operating costs, including insurance premiums, utilities, real estate taxes, and state and local taxes;

•increased property taxes due to property tax changes or reassessments;
•a favorable interest rate environment that may result in a significant number of potential residents of our multifamily apartment communities deciding to purchase homes instead of renting;

•rent control or stabilization laws or other laws regulating rental housing, which could prevent us from raising rents to offset increases in operating costs;

•civil unrest, acts of war, terrorist attacks, and natural disasters, including hurricanes, which may result in uninsured or underinsured losses;

•decreases in the underlying value of our real estate;

•changing submarket demographics; and

•changing traffic patterns.
 
In addition, periods of economic downturn or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or an increased incidence of defaults under existing leases, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.
 
The real estate investments made, and to be made, by us are difficult to sell quickly. As a result, our ability to promptly sell one or more properties in our portfolio in response to changing economic, financial, and investment conditions is limited. Return of capital and realization of gains, if any, from an investment generally will occur upon disposition or refinancing of the underlying property. We may be unable to realize our investment objectives by disposition or refinancing at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy. In particular, our ability to dispose of one or more properties within a specific time period is subject to certain limitations imposed by our tax protection agreements,

as well as weakness in or even the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions, and changes in laws, regulations or fiscal policies of jurisdictions in which the property is located.
 
In addition, the Code imposes restrictions on a REIT’s ability to dispose of properties that are not applicable to other types of real estate companies. In particular, the tax laws applicable to REITs effectively require that we hold our properties for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forego or defer sales of
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properties that otherwise would be in our best interests. Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms.

Our property taxestax protection agreements could increase duelimit our ability to propertysell or otherwise dispose of certain properties.

    In connection with the formation transactions related to our initial public offering, our Operating Partnership entered into tax rate changes or reassessment, which would adversely impact our cash flows and cash available for distribution.
Evenprotection agreements that provide that if we qualifydispose of any interest in certain protected properties in a taxable transaction prior to the seventh (or, in a limited number of cases, the tenth) anniversary of the completion of the formation transactions, subject to certain exceptions, we will indemnify certain contributors, including Messrs. Hoffler, Haddad, Kirk, and Apperson and their respective affiliates and certain of our other officers, for their tax liabilities attributable to the built-in gain that existed with respect to such property interests as of the time of our initial public offering, and the tax liabilities incurred as a REITresult of such tax protection payment. In addition, in connection with certain acquisitions completed since our initial public offering, we entered into tax protection agreements that require us to indemnify the contributors for federal incometheir tax purposes, we will be required to pay some state and local taxes on our properties. The real property taxes on our properties may increase as property tax rates change or as our properties are assessed or reassessed by taxing authorities. Therefore, the amount of property taxes we payliabilities in the event that we dispose of the properties subject to the tax protection agreements, and may enter into similar agreements in connection with future property acquisitions. Therefore, although it may increase substantially from whatbe in our stockholders’ best interests that we sell one of these properties, it may be economically prohibitive or unattractive for us to do so because of these obligations. Moreover, as a result of these potential tax liabilities, Messrs. Hoffler, Haddad, Kirk, and Apperson and certain of our other officers may have paid in the past. If the property taxes we pay increase,a conflict of interest with respect to our cash flow and cash available for distribution would be adversely impacted.determination as to certain of our properties.
 
As an owner of real estate, we could incur significant costs and liabilities related to environmental matters.
 
Under various federal, state, and local laws and regulations relating to the environment, as a current or former owner or operator of real property, we may be liable for costs and damages resulting from the presence or discharge of hazardous or toxic substances, waste, or petroleum products at, on, in, under, or migrating from such property, including costs to investigate and clean up such contamination and liability for harm to natural resources. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such contamination, and the liability may be joint and several. These liabilities could be substantial and the cost of any required remediation, removal, fines, or other costs could exceed the value of the property and our aggregate assets. In addition, the presence of contamination or the failure to remediate contamination at our properties may expose us to third-party liability for costs of remediation and personal or property damage or materially and adversely affect our ability to sell, lease, or develop our properties or to borrow using the properties as collateral. In addition, environmental laws may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which the properties may be used or businesses may be operated, and these restrictions may require substantial expenditures. See “Part"Part I—Business—Regulation.”"
 
Some of our properties have been or may be impacted by contamination arising from current or prior uses of the property, or adjacent properties, for commercial or industrial purposes. Such contamination may arise from spills of petroleum or hazardous substances or releases from tanks used to store such materials. For example, some of the tenants of properties in our retail portfolio operate gas stations or other businesses that utilize storage tanks to store petroleum products, propane, or wastes typically associated with automobile service or other operations conducted at the properties, and spills or leaks of hazardous materials from those storage tanks could expose us to liability. See “Part"Part I—Business—Regulation—Environmental Matters.”" In addition to the foregoing, while we obtained Phase I Environmental Site Assessments for each of the properties in our portfolio, the assessments are limited in scope and may have failed to identify all environmental conditions or concerns. For example, they do not generally include soil sampling, subsurface investigations or hazardous materials surveys. Furthermore, we do not have current Phase I Environmental Site Assessment reports for all of the properties in our portfolio and, as such, may not be aware of all potential or existing environmental contamination liabilities at the properties in our portfolio. As a result, we could potentially incur material liability for these issues.
 
As the owner of the buildings on our properties, we could face liability for the presence of hazardous materials, such as asbestos or lead, or other adverse conditions, such as poor indoor air quality, in our buildings. Environmental laws govern the presence, maintenance, and removal of hazardous materials in buildings, and if we do not comply with such laws, we could face fines for such noncompliance. Also, we could be liable to third parties, such as occupants of the buildings, for damages related to exposure to hazardous materials or adverse conditions in our buildings, and we could incur material expenses with respect to abatement or remediation of hazardous materials or other adverse conditions in our buildings. In addition, some of our tenants may routinely may handle and use hazardous or regulated substances and wastes as part of their operations at our properties, which are subject to regulation. Such environmental and health and safety laws and regulations could subject us or our tenants to liability resulting from these activities. Environmental liabilities could affect a tenant’s ability to make rental payments to us, and changes in laws could increase the potential liability for noncompliance. This may result in significant unanticipated expenditures or may otherwise materially and adversely affect our operations, or those of our tenants, which

could in turn have
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an adverse effect on us. If we incur material environmental liabilities in the future, we may face significant remediation costs, and we may find it difficult to sell any affected properties.

We may be subject to unknown or contingent liabilities related to acquired properties and properties that we may acquire in the future, which could have a material adverse effect on us.

    Properties that we have acquired and properties that we may acquire in the future may be subject to unknown or contingent liabilities for which we may have no recourse, or only limited recourse, against the sellers. In general, the representations and warranties provided under the transaction agreements related to the purchase of properties that we acquire may not survive the completion of the transactions. Furthermore, indemnification under such agreements may be limited and subject to various materiality thresholds, a significant deductible, or an aggregate cap on losses. As a result, there is no guarantee that we will recover any amounts with respect to losses due to breaches by the sellers of their representations and warranties. In addition, the total amount of costs and expenses that may be incurred with respect to liabilities associated with these properties may exceed our expectations, and we may experience other unanticipated adverse effects, all of which may materially and adversely affect us.
 
Our properties may contain or develop harmful mold or suffer from other air quality issues, which could lead to liability for adverse health effects and costs of remediation.
 
When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses, and bacteria. Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants, employees of our tenants, or others if property damage or personal injury is alleged to have occurred.
 
We may incur significant costs complying with various federal, state, and local laws, regulations, and covenants that are applicable to our properties.
 
Properties are subject to various covenants and federal, state, and local laws and regulatory requirements, including permitting and licensing requirements. Local regulations, including municipal or local ordinances, zoning restrictions, and restrictive covenants imposed by community developers may restrict our use of our properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our properties, including prior to developing or acquiring a property or when undertaking renovations of any of our existing properties. Among other things, these restrictions may relate to fire and safety, seismic, or hazardous material abatement requirements. There can be no assurance that existing laws and regulatory policies will not adversely affect us or the timing or cost of any future development, acquisitions, or renovations, or that additional regulations will not be adopted that increase such delays or result in additional costs. Our growth strategy may be affected by our ability to obtain permits, licenses, and zoning relief.
 
In addition, federal and state laws and regulations, including laws such as the ADA and the Fair Housing Amendment Act of 1988 (“FHAA”("FHAA"), impose further restrictions on our properties and operations. Under the ADA and the FHAA, all public accommodations must meet federal requirements related to access and use by disabled persons. Some of our properties may currently be in non-compliance with the ADA or the FHAA. If one or more of the properties in our portfolio is not in compliance with the ADA, the FHAA, or any other regulatory requirements, we may incur additional costs to bring the property into compliance, incur governmental fines or the award of damages to private litigants, or be unable to refinance such properties. In addition, we do not know whether existing requirements will change or whether future requirements will require us to make significant unanticipated expenditures that will adversely impact our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
Risks Related to Our Organizational Structure
 
Daniel Hoffler and his affiliates own, directly or indirectly, a substantial beneficial interest in our company on a fully diluted basis and have the ability to exercise significant influence on our company and our Operating Partnership, including the approval of significant corporate transactions.
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As of December 31, 2017,2020, Daniel Hoffler, our Executive Chairman, owned approximately 9%6% and, collectively, Messrs. Hoffler, Haddad, and Kirk owned approximately 15%11% of the combined outstanding shares of our common stock and OP Units of our Operating Partnership (which OP Units may be redeemable for shares of our common stock). Consequently, these individuals may be able to significantly influence the outcome of matters submitted for stockholder action, including the approval of significant corporate transactions, including business combinations, consolidations, and mergers. 
 
Conflicts of interest may exist or could arise in the future between the interests of our stockholders and the interests of holders of units in our Operating Partnership, which may impede business decisions that could benefit our stockholders.
 
Conflicts of interest may exist or could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our Operating Partnership or any partner thereof, on the other.thereof. Our directors and officers have duties to our company under Maryland law in connection with their management of our company. At the same time, we, as the general partner of our Operating Partnership, have fiduciary duties and obligations to our Operating Partnership and its limited partners

under Virginia law and the partnership agreement of our Operating Partnership in connection with the management of our Operating Partnership. Our fiduciary duties and obligations as the general partner of our Operating Partnership may come into conflict with the duties of our directors and officers to our company. Messrs. Hoffler, Haddad, and Kirk own a significant interest in our Operating Partnership as limited partners and may have conflicts of interest in making decisions that affect both our stockholders and the limited partners of our Operating Partnership.
 
Under Virginia law, a general partner of a Virginia limited partnership has fiduciary duties of loyalty and care to the partnership and its partners and must discharge its duties and exercise its rights as general partner under the partnership agreement or Virginia law consistently with the obligation of good faith and fair dealing. The partnership agreement provides that, in the event of a conflict between the interests of our Operating Partnership or any partner, on the one hand, and the separate interests of our company or our stockholders, on the other hand, we, in our capacity as the general partner of our Operating Partnership, are under no obligation not to give priority to the separate interests of our company or our stockholders, and that any action or failure to act on our part or on the part of our directors that gives priority to the separate interests of our company or our stockholders that does not result in a violation of the contractual rights of the limited partners of the Operating Partnership under its partnership agreement does not violate the duty of loyalty that we, in our capacity as the general partner of our Operating Partnership, owe to the Operating Partnership and its partners.
 
Additionally, the partnership agreement provides that we will not be liable to the Operating Partnership or any partner for monetary damages for losses sustained, liabilities incurred, or benefits not derived by the Operating Partnership or any limited partner, except for liability for our intentional harm or gross negligence. Our Operating Partnership must indemnify us, our directors and officers, and our designees from and against any and all claims that relate to the operations of our Operating Partnership, unless: (i) an act or omission of the person was material to the matter giving rise to the action and either was committed in bad faith or was the result of active and deliberate dishonesty, (ii) the person actually received an improper personal benefit in violation or breach of the partnership agreement, or (iii) in the case of a criminal proceeding, the indemnified person had reasonable cause to believe that the act or omission was unlawful. Our Operating Partnership must also pay or reimburse the reasonable expenses of any such person upon its receipt of a written affirmation of the person’s good faith belief that the standard of conduct necessary for indemnification has been met and a written undertaking to repay any amounts paid or advanced if it is ultimately determined that the person did not meet the standard of conduct for indemnification. Our Operating Partnership will not indemnify or advance funds to any person with respect to any action initiated by the person seeking indemnification without our approval (except for any proceeding brought to enforce such person’s right to indemnification under the partnership agreement) or if the person is found to be liable to our Operating Partnership on any portion of any claim in the action.
We may be subject to unknown or contingent liabilities related to acquired properties and properties that we may acquire in the future, which could have a material adverse effect on us.
Properties that we have acquired, and properties that we may acquire in the future, may be subject to unknown or contingent liabilities for which we may have no recourse, or only limited recourse, against the sellers. In general, the representations and warranties provided under the transaction agreements related to the purchase of properties that we acquire may not survive the completion of the transactions. Furthermore, indemnification under such agreements may be limited and subject to various materiality thresholds, a significant deductible or an aggregate cap on losses. As a result, there is no guarantee that we will recover any amounts with respect to losses due to breaches by the sellers of their representations and warranties. In addition, the total amount of costs and expenses that may be incurred with respect to liabilities associated with these properties may exceed our expectations, and we may experience other unanticipated adverse effects, all of which may materially and adversely affect us.

Our charter contains certain provisions restricting the ownership and transfer of our stock that may delay, defer, or prevent a change of control transaction that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests.
 
Our charter contains certain ownership limits with respect to our stock. Our charter, among other restrictions, prohibits the beneficial or constructive ownership by any person of more than 9.8% in value or number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our stock, excluding any shares that are not treated as outstanding for federal income tax purposes. Our board of directors, in its sole and absolute discretion, may exempt a person, prospectively or retroactively, from this ownership limit if certain conditions are satisfied. This ownership limit as well as other restrictions on ownership and transfer of our stock in our charter may: 


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•discourage a tender offer or other transactions or a change in management or of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests; and

•result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of certain of the benefits of owning the additional shares.
 
We could increase the number of authorized shares of stock, classify and reclassify unissued stock, and issue stock without stockholder approval.
 
Our board of directors, without stockholder approval, has the power under our charter to amend our charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we are authorized to issue. In addition, under our charter, our board of directors, without stockholder approval, has the power to authorize us to issue authorized but unissued shares of our common stock or preferred stock and to classify or reclassify any unissued shares of our common stock or preferred stock into one or more classes or series of stock and set the preference, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption for such newly classified or reclassified shares. As a result, we may issue series or classes of common stock or preferred stock with preferences, dividends, powers, and rights, voting or otherwise, that are senior to, or otherwise conflict with, the rights of holders of our common stock. Although our board of directors has no such intention at the present time, it could establish a class or series of preferred stock that could, depending on the terms of such series, delay, defer, or prevent a transaction or a change of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests.


Certain provisions of Maryland law could inhibit changes of control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests.
 
Certain provisions of the Maryland General Corporation Law (the “MGCL”"MGCL") may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including: 


“•"business combination”combination" provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder”"interested stockholder" (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting shares or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding stock at any time within the two-year period immediately prior to the date in question) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose certain fair price and supermajority stockholder voting requirements on these combinations; and

“•"control share”share" provisions that provide that holders of “control shares”"control shares" of our company (defined as shares of stock that, when aggregated with other shares of stock controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control"control share acquisition”acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”"control shares") have no voting rights with respect to their control shares, except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
 
By resolution of our board of directors, we have opted out of the business combination provisions of the MGCL and provided that any business combination between us and any other person is exempt from the business combination provisions of the MGCL, provided that the business combination is first approved by our board of directors (including a majority of directors who are not affiliates or associates of such persons). In addition, pursuant to a provision in our bylaws, we have opted out of the control share provisions of the MGCL. However, our board of directors may by resolution elect to opt in to the business combination provisions of the MGCL and we may, by amendment to our bylaws, opt in to the control share provisions of the MGCL in the future.
 
Certain provisions of the MGCL permit our board of directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain corporate governance provisions, some of which (for example, a classified board) are not currently applicable to us. If implemented, these provisions may have the effect of limiting or precluding a third party from making an unsolicited acquisition proposal for us or of delaying, deferring, or preventing a change in control of us under circumstances that otherwise could provide the holders of shares of our common stock with the

opportunity to realize a
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premium over the then current market price. Our charter contains a provision whereby we elect, at such time as we become eligible to do so, to be subject to the provisions of Title 3, Subtitle 8 of the MGCL relating to the filling of vacancies on our board of directors.
 
Certain provisions in the partnership agreement of our Operating Partnership may delay, make more difficult, or prevent unsolicited acquisitions of us.
 
Provisions in the partnership agreement of our Operating Partnership may delay, make more difficult, or prevent unsolicited acquisitions of us or changes of our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some of our stockholders might consider such proposals, if made, desirable. These provisions include, among others: 


•redemption rights;

•a requirement that we may not be removed as the general partner of our Operating Partnership without our consent;

•transfer restrictions on OP Units;

•our ability, as general partner, in some cases, to amend the partnership agreement and to cause the Operating Partnership to issue units with terms that could delay, defer, or prevent a merger or other change of control of us or our Operating Partnership without the consent of the limited partners; and

•the right of the limited partners to consent to direct or indirect transfers of the general partnership interest, including as a result of a merger or a sale of all or substantially all of our assets, in the event that such transfer requires approval by our common stockholders.
 
The limited partners in our Operating Partnership (other than us) owned approximately 28.0%26.1% of the outstanding OP Units of our Operating Partnership as of December 31, 2017.  
Our tax protection agreements could limit our ability to sell or otherwise dispose of certain properties.
In connection with the formation transactions related to our initial public offering, our Operating Partnership entered into tax protection agreements that provide that if we dispose of any interest in certain protected properties in a taxable transaction prior to the seventh (or, in a limited number of cases, the tenth) anniversary of the completion of the formation transactions, subject to certain exceptions, we will indemnify certain contributors, including Messrs. Hoffler, Haddad, Kirk and Apperson and their respective affiliates and certain of our other officers, for their tax liabilities attributable to the built-in gain that existed with respect to such property interests as of the time of our initial public offering, and the tax liabilities incurred as a result of such tax protection payment. In addition, in connection with certain acquisitions completed since our initial public offering, we entered into tax protection agreements that require us to indemnify the contributors for their tax liabilities in the event that we dispose of the properties subject to the tax protection agreements, and may enter into similar agreements in connection with future property acquisitions. Therefore, although it may be in our stockholders’ best interests that we sell one of these properties, it may be economically prohibitive or unattractive for us to do so because of these obligations. Moreover, as a result of these potential tax liabilities, Messrs. Hoffler, Haddad, Kirk and Apperson and certain of our other officers may have a conflict of interest with respect to our determination as to certain of our properties. 
Our tax protection agreements may require our Operating Partnership to maintain certain debt levels that otherwise would not be required to operate our business.
Under our tax protection agreements, our Operating Partnership has agreed to provide certain contributors of properties we have acquired, including Messrs. Hoffler, Haddad, Kirk, and Apperson and their respective affiliates and certain of our other officers, the opportunity to guarantee debt or enter into deficit restoration obligations upon a future repayment, retirement, refinancing or other reduction (other than scheduled amortization) of currently outstanding debt. If we fail to make such opportunities available, we will be required to deliver to each such contributor a cash payment intended to approximate the contributor’s tax liability resulting from our failure to make such opportunities available to that contributor and the tax liabilities incurred as a result of such tax protection payment. We agreed to these provisions in order to assist our contributors in deferring the recognition of taxable gain as a result of the contribution of certain properties to us. These obligations may require us to maintain more or different indebtedness than we would otherwise require for our business.

We may pursue less vigorous enforcement of terms of certain agreements with members of our senior management and our affiliates because of our dependence on them and conflicts of interest.
Each of Messrs. Hoffler, Haddad and Kirk, our Executive Chairman, President and Chief Executive Officer, and Vice Chairman, respectively, were parties to or had interests in contribution agreements with us pursuant to which we acquired interests in our properties and assets. In addition, we have entered into option agreements with certain of our officers and directors, or entities they control, with respect to certain parcels of developable land. We may choose not to enforce, or to enforce less vigorously, our rights under these agreements because of our desire to maintain our ongoing relationships with members of our board of directors and our management, with possible negative impact on stockholders.

Our board of directors may change our strategies, policies and procedures without stockholder approval and we may become more highly leveraged, which may increase our risk of default under our debt obligations.
Our investment, financing, leverage and distribution policies, and our policies with respect to all other activities, including growth, capitalization, and operations, will be determined exclusively by our board of directors and may be amended or revised at any time by our board of directors without notice to or a vote of our stockholders. This could result in us conducting operational matters, making investments or pursuing different business or growth strategies than those contemplated in this Annual Report on Form 10-K. Further, our charter and bylaws do not limit the amount or percentage of indebtedness, funded or otherwise, that we may incur. Our board of directors may alter or eliminate our current policy on borrowing at any time without stockholder approval. If this policy changed, we could become more highly leveraged, which could result in an increase in our debt service costs. Higher leverage also increases the risk of default on our obligations. In addition, a change in our investment policies, including the manner in which we allocate our resources across our portfolio or the types of assets in which we seek to invest, may increase our exposure to interest rate risk, real estate market fluctuations and liquidity risk. Changes to our policies with regards to the foregoing could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.2020.  
 
Our rights and the rights of our stockholders to take action against our directors and officers are limited.
 
Under Maryland law, generally, a director will not be liable if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, our charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from:


•actual receipt of an improper benefit or profit in money, property or services; or

•active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated.
 
Our charter authorizes us to indemnify our directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law. Our bylaws require us to indemnify each director and officer, to the maximum extent permitted by Maryland law, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service to us. In addition, we may be obligated to advance the defense costs incurred by our directors and officers. We have entered into indemnification agreements with each of our executive officers and directors whereby we agreed to indemnify our directors and executive officers to the fullest extent permitted by Maryland law against all expenses and liabilities incurred in their capacity as an officer or director, subject to limited exceptions. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist absent the current provisions in our charter and bylaws and the indemnification agreements or that might exist with other companies.
 
We are a holding company with no direct operations and, as such, we will rely on funds received from our Operating Partnership to pay liabilities, and the interests of our stockholders will be structurally subordinated to all liabilities and obligations of our Operating Partnership and its subsidiaries.
 
We are a holding company and conduct substantially all of our operations through our Operating Partnership. We do not have, apart from an interest in our Operating Partnership, any independent operations. As a result, we rely on cash distributions from our Operating Partnership to pay any dividends we might declare on shares of our common stock and preferred stock. We also rely on distributions from our Operating Partnership to meet any of our obligations, including any tax liability on taxable income allocated to us from our Operating Partnership. In addition, because we are a holding company, your claims as a stockholder will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our Operating Partnership and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation, or

reorganization, our assets and those of our Operating Partnership and its subsidiaries will be available to satisfy the claims of
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our stockholders only after all of our and our Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.


Our Operating Partnership may issue additional OP Units to third parties without the consent of our stockholders, which would reduce our ownership percentage in our Operating Partnership and could have a dilutive effect on the amount of distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to our stockholders.
 
As of December 31, 2017,2020, we owned 72.0%73.9% of the outstanding OP Units in our Operating Partnership. We regularly have issued OP Units to third parties as consideration for acquisitions, and we may continue to do so in the future. Any such future issuances would reduce our ownership percentage in our Operating Partnership and could affect the amount of distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to our stockholders. Because stockholders do not directly own OP Units, you do not have any voting rights with respect to any such issuances or other partnership level activities of our Operating Partnership.  
 
Risks Related to Our Status as a REIT
 
Failure to qualify as a REIT, or failure to remain qualifiedmaintain our qualification as a REIT would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distribution to our stockholders.
 
We have elected to be taxed and to operate in a manner that will allow us to qualify as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2013. We have not requested and do not plan to request a ruling from the Internal Revenue Service (the “IRS”"IRS") that we qualify as a REIT. Therefore, we cannot be assured that we will qualify as a REIT, or that we will remain qualified as such in the future. If we fail to qualify as a REIT or otherwise lose our REIT status in any taxable year, we will face serious tax consequences that would substantially reduce the funds available for distribution to our stockholders for each of the years involved because: 


•we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates;

•we could be subject to increased state and local taxes; and

•unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.

In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our common stock.

Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flows.

Even if we qualify for taxation as a REIT, we may be subject to certain federal, state, and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property, and transfer taxes. In addition, our TRS will be subject to regular corporate federal, state, and local taxes. Any of these taxes would decrease cash available for distribution to our stockholders.
Failure to make required distributions would subject us to U.S. federal corporate income tax.
We intend to continue to operate in a manner so as to qualify as a REIT for U.S. federal income tax purposes. In order to qualify as a REIT, we generally are required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year to our stockholders. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under the Code.



Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
 
To qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders, and the ownership of our capital stock. In order to meet these tests, we may be required to forego investments we might otherwise make. Thus, compliance with the REIT requirements may hinder our performance.
 
In particular, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities, and qualified real estate assets. The remainder of our investment in securities (other than government securities, securities of TRSs, and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities, securities of TRSs, and qualified real estate assets) can consist of the securities of any one issuer, and no more than 20% of the value of our total assets can be represented by the securities of one or more TRSs. If we fail to comply with these requirements at the end of any
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calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders. 
 
The prohibited transactions tax may limit our ability to dispose of our properties.
 
A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property other than foreclosure property, held primarily for sale to customers in the ordinary course of business. We may be subject to the prohibited transaction tax equal to 100% of the net gain upon a disposition of real property. Although a safe harbor to the characterization of the sale of real property by a REIT as a prohibited transaction is available, we cannot assure you that we can comply with the safe harbor or that we will avoid owning property that may be characterized as held primarily for sale to customers in the ordinary course of business. Consequently, we may choose not to engage in certain sales of our properties or may conduct such sales through our TRS, which would be subject to federal and state income taxation.

We may pay taxable dividends in shares of our common stock and cash, in which case stockholders may sell shares of our common stockChanges to pay tax on such dividends, placing downward pressure on the market price of our common stock.
We may distribute taxable dividends that are payable in cash and common stock at the election of each stockholder. The IRS has issued private letter rulings to other REITs treating certain distributions that are paid partly in cash and partly in stock as taxable dividends that would satisfy the REIT annual distribution requirement and qualify for the dividends paid deduction for U.S. federal income tax purposes. Those rulings may be relied upon only by taxpayerslaws, including the enactment of certain tax reform measures, could have an adverse impact on our business and financial results.

In recent years, numerous legislative, judicial and administrative changes have been made to whom they were issued, but we could request a similar ruling from the IRS. In addition, the IRS previously issued a revenue procedure authorizing publicly traded REITs to make elective cash/stock dividends, but that revenue procedure does not apply to our 2013 and future taxable years. Accordingly, it is unclear whether and to what extent we will be able to make taxable dividends payable in cash and common stock.
If we made a taxable dividend payable in cash and common stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes. Aslaws applicable to investments in real estate and REITs, including the passage of the Tax Cuts and Jobs Act of 2017. Federal legislation intended to ameliorate the economic impact of the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act, has been enacted that makes technical corrections to, or modifies on a result, stockholderstemporary basis, certain of the provisions of the Tax Cut and Jobs Act of 2017, and it is possible that additional such legislation may be required to pay income tax with respect to such dividendsenacted in excessthe future. The full impact of the cash dividends received. If a U.S. stockholder sellsTax Cuts and Jobs Act of 2017 and the common stockCARES Act may not become evident for some period of time. In addition, there can be no assurance that it receives as a dividend in orderfuture changes to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. federal income tax with respectlaws or regulatory changes will not be proposed or enacted that could impact our business and financial results. The REIT rules are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department, which may result in revisions to such dividends, includingregulations and interpretations in respect of all or a portionaddition to statutory changes. If enacted, certain of such dividend that is payablechanges could have an adverse impact on our business and financial results.

We cannot predict whether, when, or to what extent any new U.S. federal tax laws, regulations, interpretations, or rulings will impact the real estate investment industry or REITs. Prospective investors are urged to consult their tax advisors regarding the effect of potential future changes to the federal tax laws on an investment in common stock. If we made a taxable dividend payable in cash and our common stock and a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock. We do not currently intend to pay taxable dividends of our common stock and cash, although we may choose to do so in the future.shares.



The ability of our board of directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.
 
Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interests to continue to qualify as a REIT. If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders.
 
Our ownership of our TRS will be subject to limitations and our transactions with our TRS will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.
 
Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more TRS. In addition, the Code limits the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The Code also imposes a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. Furthermore, we will monitor the value of our respective investments in our TRS for the purpose of ensuring compliance with TRS ownership limitations and will structure our transactions with our TRS on terms that we believe are arm’s length to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the 20% REIT subsidiaries limitation or to avoid application of the 100% excise tax. 
 
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You may be restricted from acquiring or transferring certain amounts of our common stock.
 
The restrictions on ownership and transfer in our charter may inhibit market activity in our capital stock and restrict our business combination opportunities.
 
In order to qualify as a REIT for each taxable year after 2013, five or fewer individuals, as defined in the Code, may not own, beneficially or constructively, more than 50% in value of our issued and outstanding stock at any time during the last half of a taxable year. Attribution rules in the Code determine if any individual or entity beneficially or constructively owns our capital stock under this requirement. Additionally, at least 100 persons must beneficially own our capital stock during at least 335 days of a taxable year for each taxable year after 2013. To help ensure that we meet these tests, our charter restricts the acquisition and ownership of shares of our capital stock.
 
Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary to preserve our qualification as a REIT. Unless exempted by our board of directors, our charter prohibits any person from beneficially or constructively owning more than 9.8% in value or number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our capital or preferred stock. Our board of directors may not grant an exemption from this restriction to any proposed transferee whose ownership in excess of 9.8% of the value of our outstanding shares would result in our failing to qualify as a REIT. This restriction, as well as other restrictions on transferability and ownership will not apply, however, if our board of directors determines that it is no longer in our best interests to continue to qualify as a REIT.
 
Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
 
The maximum tax rate applicable to “qualified"qualified dividend income”income" payable to U.S. stockholders that are taxed at individual rates is 20%. Dividends payable by REITs, however, generally are not eligible for the reduced rates on qualified dividend income. Instead, our ordinary dividends generally are taxed at the higher tax rates applicable to ordinary income, the current maximum rate of which is 37%. However, for taxable years prior to 2026, individual stockholders are generally allowed to deduct 20% of the aggregate amount of ordinary dividends distributed by us, subject to certain limitations, which would reduce the maximum marginal effective tax rate for individuals on the receipt of such ordinary dividends to 29.6%.
Recent changes to the U.S. federal income tax laws, including the enactment of certain tax reform measures, could have an adverse impact on the economy, our tenants, and our business and financial results.

On December 22, 2017, President Trump signed the legislation (the "Tax Reform Legislation") commonly known as the Tax Cuts and Jobs Act into law, which, among other changes:

Reduces the corporate income tax rate from 35% to 21% (including with respect to our taxable REIT subsidiaries);
Reduces the rate of U.S. federal withholding tax on distributions made to non-U.S. shareholders by a REIT that are attributable to gains from the sale or exchanges of U.S. real property interests from 35% to 21%;

Allows an immediate 100% deduction of the cost of certain capital asset investments (generally excluding real estate assets), subject to a phase-down of the deduction percentage over time;
Changes the recovery periods for certain real property and building improvements (for example, to 15 years for qualified improvement property under the modified accelerated cost recovery system, and to 30 years (previously 40 years) for residential real property, and 20 years (previously 40 years) for qualified improvement property under the alternative depreciation system);
Restricts the deductibility of interest expense by businesses (generally to 30% of the business' adjusted taxable income) except, among others, real property businesses electing out of such restriction; generally, we expect our business to qualify as such a real property business, but businesses conducted by our taxable REIT subsidiaries may not qualify, and we have not yet determined whether we will make such election;
Requires the use of the less favorable alternative depreciation system to depreciate real property in the event a real property business elects to avoid the interest deduction restriction above;
Restricts the benefits of like-kind exchanges that defer capital gains for tax purposes to exchanges of real property;
Requires accrual method taxpayers to take certain amounts in income no later than the taxable year in which such income is taken into account as revenue in an applicable financial statement prepared under GAAP, which, with respect to certain leases, could accelerate the inclusion of rental income;
Eliminates the corporate alternative minimum tax;
Reduces the highest marginal income tax rate for individuals to 37% from 39.6% (excluding, in each case, the 3.8% Medicare tax on net investment income);
Generally allows a deduction for individuals equal to 20% of certain income from pass-through entities, including ordinary dividends distributed by a REIT (excluding capital gain dividends and qualified dividend income), generally resulting in a maximum federal income tax rate applicable to such dividends of 29.6% compared to 37% (excluding, in each case, the 3.8% Medicare tax on net investment income); and
Limits certain deductions for individuals, including deductions for state and local income taxes, and eliminates deductions for miscellaneous itemized deductions (including certain investment expenses).

Many of the provisions in the Tax Reform Legislation expire in seven years (at the end of 2025). As a result of the changes to U.S. federal tax laws implemented by the Tax Reform Legislation, our taxable income and the amount of distributions to our stockholders required in order to maintain our REIT status, and our relative tax advantage as a REIT, may significantly change.

The Tax Reform Legislation is a far-reaching and complex revision to the U.S. federal income tax laws with disparate and, in some cases, countervailing impacts on different categories of taxpayers and industries, and will require subsequent rulemaking and interpretation in a number of areas. The long-term impact of the Tax Reform Legislation on the economy, us, our investors, our tenants, the real estate industry, and government revenues cannot be reliably predicted at this early stage of the new law's implementation. Furthermore, the Tax Reform Legislation may negatively impact certain of our tenants' operating results, financial condition, and future business plans. The Tax Reform Legislation may also result in reduced government revenues, and therefore reduced government spending, which may negatively impact tenants that directly or indirectly rely on government funding. There can be no assurance that the Tax Reform Legislation will not negatively impact our operating results, financial conditions, and future business operations. Additionally, the Tax Reform Legislation may be adverse to certain of our stockholders. Prospective investors are urged to consult their tax advisors regarding the effect of the changes to the U.S. federal tax laws on an investment in our shares.


If our Operating Partnership failed to qualify as a partnership for federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences.
 
We believe that our Operating Partnership will be treated as a partnership for federal income tax purposes. As a partnership, our Operating Partnership will not be subject to federal income tax on its income. Instead, each of its partners, including us, will be allocated, and may be required to pay tax with respect to, its share of our Operating Partnership’s income. We cannot assure you, however, that the IRS will not challenge the status of our Operating Partnership or any other subsidiary partnership in which we own an interest as a partnership for federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating our Operating Partnership or any such other subsidiary partnership as an entity taxable as a corporation for federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, we would likely cease to qualify as a REIT. Also, the failure of our Operating Partnership or any subsidiary partnerships to qualify as a partnership could cause it to become subject to federal and state corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners, including us.
 

To maintain our REIT status, we may be forced to borrow funds during unfavorable market conditions, and the unavailability of such capital on favorable terms at the desired times, or at all, may cause us to curtail our investment activities or dispose of assets at inopportune times or on unfavorable terms, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
To qualify as a REIT, we generally must distribute to our stockholders at least 90% of our REIT taxable income each year, excluding net capital gains, and we will be subject to regular corporate income taxes to the extent that we distribute less than 100% of our REIT taxable income each year. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. In order to maintain our REIT status and avoid the payment of income and excise taxes, we may need to borrow funds to meet the REIT distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. These borrowing needs could result from, among other things, differences in timing between the actual receipt of cash and inclusion of income for federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required principal or
40
amortization payments. These sources, however, may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of factors, including the market’s perception of our growth potential, our current debt levels, the market price of our common stock, and our current and potential future earnings. We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our investment activities or dispose of assets at inopportune times or on unfavorable terms, which could materially and adversely affect our financial condition, results of operations, cash flow, cash available for distribution, and ability to service our debt obligations.
 
Risks Related to Our CommonCapital Stock
 
We may be unable to make distributions at expected levels, which could result in a decrease in the market price of our common stock.stock and Series A Preferred Stock.
 
We intend to continue to pay regular quarterly distributions to our stockholders. All distributions will be made at the discretion of our board of directors and will be based upon, among other factors, our historical and projected results of operations, financial condition, cash flows and liquidity, maintenance of our REIT qualification and other tax considerations, capital expenditure and other expense obligations, debt covenants, contractual prohibitions or other limitations, applicable law, and such other matters as our board of directors may deem relevant from time to time. If sufficient cash is not available for distribution from our operations, we may have to fund distributions from working capital, borrow to provide funds for such distributions, or reduce the amount of such distributions. To the extent we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been. If cash available for distribution generated by our assets is less than our current estimate, or if such cash available for distribution decreases in future periods from expected levels, our inability to make the expected distributions could result in a decrease in the market price of our common stock.stock and Series A Preferred Stock.
 
Our ability to make distributions may also be limited by our credit facility. Under the terms of the credit facility, our ability to make distributions during any twelve-month period is limited to the greater of (1) 95% of our adjusted funds from operations (as defined in the credit agreement) or (2) the aggregate amount of Restricted Payments (as defined in the credit agreement) required for us to (a) maintain our REIT status and (b) avoid the payment of federal or state income or excise tax. In addition, if a default or events of default exist or would result from a distribution, we are precluded from making certain distributions other than those required to allow us to maintain our status as a REIT.

As a result of the foregoing, we may not be able to make distributions in the future, and our inability to make distributions, or to make distributions at expected levels, could result in a decrease in the market price of our common stock.stock and Series A Preferred Stock.
 
The market price and trading volume of our common stock and Series A Preferred Stock may be volatile and could decline substantially in the future.
 
The market price of our common stock and Series A Preferred Stock may be volatile in the future. In addition, the trading volume in our common stock and Series A Preferred Stock may fluctuate and cause significant price variations to occur. We cannot assure stockholders that the market price of our common stock and Series A Preferred Stock will not fluctuate or decline significantly in the future, including as a result of factors unrelated to our operating performance or prospects in 20182021 compared to 2017.2020. In particular, the market price of our common stock and Series A Preferred Stock could be subject to wide fluctuations in response to a number of factors, including, among others, the following: 


•actual or anticipated variations in our quarterly operating results or dividends;


•changes in our FFO, Normalized FFO, or earnings estimates;

•publication of research reports about us or the real estate industry;

•increases in market interest rates that lead purchasers of our shares to demand a higher yield;

•changes in market valuations of similar companies;

•adverse market reaction to any additional debt we incur in the future;

•additions or departures of key management personnel;

•actions by institutional stockholders;

•speculation in the press or investment community;

•the realization of any of the other risk factors presented in this Annual Report on Form 10-K;

•the extent of investor interest in our securities;

•the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;

•changes in the federal government;

41
•our underlying asset value;

•investor confidence in the stock and bond markets generally;

•further changes in tax laws;

•future equity issuances;

•failure to meet earnings estimates;

•failure to meet and maintain REIT qualifications;

•changes in our credit ratings;

•general market and economic conditions;

•our issuance of debt securities or additional preferred equity securities; and

•our financial condition, results of operations, and prospects.


In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their common stock. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have a material and adverse effect on our financial condition, results of operations, cash flow, cash available for distribution, ability to service our debt obligations, and the per share trading price of our common stock.stock and Series A Preferred Stock.
 
Increases in market interest rates may have an adverse effect on the trading prices of our common stock and Series A Preferred Stock as prospective purchasers of our common stock and Series A Preferred Stock may expect a higher dividend yield and as an increased cost of borrowing may decrease our funds available for distribution.

One of the factors that will influence the trading prices of our common stock and Series A Preferred Stock will be the dividend yield on the common stock (as a percentage of the price of our common stock)stock or Series A Preferred Stock, as applicable) relative to market interest rates. An increase in market interest rates, which are currently at low levels relative to historical rates, may lead prospective purchasers of our common stock or Series A Preferred Stock to expect a higher dividend yield (with a resulting decline in the trading prices of our common stock)stock or Series A Preferred Stock, as applicable) and higher interest

rates would likely increase our borrowing costs and potentially decrease funds available for distribution. Thus, higher market interest rates could cause the market price of our common stock or Series A Preferred Stock to decrease.

Our Series A Preferred Stock is subordinate to our existing and future debt, and the interests of holders of our Series A Preferred Stock could be diluted by the issuance of additional shares of preferred stock and by other transactions.

    Our Series A Preferred Stock ranks junior to all of our existing and future indebtedness, any classes and series of our capital stock expressly designated as ranking senior to our Series A Preferred Stock as to distribution rights and rights upon our liquidation, dissolution or winding up, and other non-equity claims on us and our assets available to satisfy claims against us, including claims in bankruptcy, liquidation, or similar proceedings. Subject to limitations prescribed by Maryland law and our charter, our board of directors is authorized to issue, from our authorized but unissued shares of capital stock, preferred stock in such classes or series as our board of directors may determine and to establish from time to time the number of shares of preferred stock to be included in any such class or series. The issuance of additional shares of Series A Preferred Stock or additional shares of capital stock ranking on parity with our Series A Preferred Stock would dilute the interests of the holders of our Series A Preferred Stock, and the issuance of shares of any class or series of our capital stock expressly designated as ranking senior to our Series A Preferred Stock as to distribution rights and rights upon our liquidation, dissolution or winding up, or the incurrence of additional indebtedness could adversely affect our ability to pay dividends on, redeem, or pay the liquidation preference on our Series A Preferred Stock. Other than the conversion right afforded to holders of our Series A Preferred Stock that may become exercisable in connection with a change of control (as defined in the articles supplementary designating the terms of our Series A Preferred Stock), none of the provisions relating to our Series A Preferred Stock contain any terms relating to or limiting our indebtedness or affording the holders of our Series A Preferred Stock protection in the event of a highly leveraged or other transaction, including a merger or the sale, lease, or conveyance of all or substantially all our assets, that might adversely affect the holders of our Series A Preferred Stock, so long as the rights of the holders of our Series A Preferred Stock are not materially and adversely affected.

Holders of our Series A Preferred Stock have extremely limited voting rights.

    Our common stock is the only class of our securities that carry full voting rights. Voting rights for holders of our Series A Preferred Stock exist primarily with respect to the ability to elect, together with holders of our capital stock ranking on parity with our Series A Preferred Stock and having similar voting rights, two additional directors to our board of directors in the event that six quarterly dividends (whether or not consecutive) payable on our Series A Preferred Stock are in arrears, and with respect to voting on amendments to our charter or articles supplementary relating to our Series A Preferred Stock that materially and adversely affect the rights of the holders of our Series A Preferred Stock or create additional classes or series of
42
our capital stock expressly designated as ranking senior to our Series A Preferred Stock as to distribution rights and rights upon our liquidation, dissolution, or winding up. Other than as described above and as set forth in more detail in the articles supplementary designating the terms of our Series A Preferred Stock, holders of our Series A Preferred Stock will not have any voting rights.

Holders of our Series A Preferred Stock may not be permitted to exercise conversion rights upon a change of control. If exercisable, the change of control conversion feature of our Series A Preferred Stock may not adequately compensate preferred stockholders, and the change of control conversion and redemption features of our Series A Preferred Stock may make it more difficult for a party to take over our company or discourage a party from taking over our company

    Upon the occurrence of a change of control (as defined in the articles supplementary designating the terms of our Series A Preferred Stock), holders of our Series A Preferred Stock will have the right to convert some or all of their Series A Preferred Stock into shares of our common stock (or equivalent value of alternative consideration). Notwithstanding that we generally may not redeem our Series A Preferred Stock prior to June 18, 2024, we have a special optional redemption right to redeem our Series A Preferred Stock in the event of a change of control, and holders of our Series A Preferred Stock will not have the right to convert any shares of our Series A Preferred Stock that we have elected to redeem prior to the change of control conversion date. Upon such a conversion, the holders will be limited to a maximum number of shares of our common stock available for future issuance orequal to the 2.97796 (i.e. the "Share Cap"), subject to certain adjustments, multiplied by the number of our Series A Preferred Stock converted. If the Common Stock Price (as defined in the articles supplementary designating the terms of our Series A Preferred Stock) is less than $8.395 (which is approximately 50% of the per-share closing sale could materially and adversely affect the per share trading price of our common stock and our abilityon June 10, 2019), subject to obtain additional capital.
We cannot predict whether future issuances or salesadjustment, each holder will receive a maximum of 2.97796 shares of our common stock or the availability of shares for resale in the open market will decrease the per share trading price of our common stock. The issuance of substantial numbers of sharesSeries A Preferred Stock, which may result in a holder receiving value that is less than the liquidation preference of our common stock in the public market, the redemption of OP Units for sharesSeries A Preferred Stock. In addition, those features of our common stock,Series A Preferred Stock may have the effect of inhibiting a third party from making an acquisition proposal for our company or the perception that such issuances might occur could adversely affect the per share trading priceof delaying, deferring or preventing a change of control of our common stock. As of February 21, 2018, 45,100,351 shares of our common stock were outstanding. In addition, as of February 21, 2018, 17,440,861 OP Units in our Operating Partnership were outstanding (other than OP Units held by us), which were eligible to be tendered for redemption for cash or, at our option, for shares of our common stock on a one-for-one basis. We have an effective resale shelf registration statement pursuant to which we may issue freely tradeable shares of our common stock upon redemption of such OP Units. Accordingly, a substantial number of shares of our common stockcompany under circumstances that otherwise could be issued inprovide the future pursuant to such resale shelf registration statement. In addition, we have an effective shelf registration statement covering the possible resale, from time to time, of up to 2,000,000 shares of our common stock that were issued in connection with our acquisition of a retail property in October 2016. The sale of such shares, or the perception that such a sale may occur, could materially and adversely affect the per share trading price of our common stock. In addition, as of February 21, 2018, 1,039,426 sharesholders of our common stock and other equity-based awards were available for future issuance under our 2013 Amended and Restated Equity Incentive Plan (the "Equity Plan").Series A Preferred Stock with the opportunity to realize a premium over the then-current market price or that stockholders may otherwise believe is in their best interests.

Item 1B.    Unresolved Staff Comments.  
 
The issuance of substantial numbers of shares of equity securities, including OP Units, or the perception that such issuances might occur, could materially and adversely affect us, including the per share trading price of shares of our common stock.    None.

Item 2.    Properties.  
 
The redemption of OP Units for common stock, the vesting of any restricted stock granted to certain directors, executive officers and other employees under our Equity Plan, the issuance of our common stock or OP Units in connection with future property, portfolio or business acquisitions, and other issuances of our common stock could have an adverse effect on the per share trading price of our common stock, and the existence of units, options or shares of our common stock issuable under our Equity Plan or upon redemption of OP Units may adversely affect the terms upon which we may be able to obtain additional capital through the sale of equity securities. In addition, future issuances of shares of our common stock or OP Units may be dilutive to existing stockholders.

Future offerings of debt, which would be senior to our common stock upon liquidation, and preferred equity securities, which may be senior to our common stock for purposes of dividend distributions or upon liquidation, may materially and adversely affect us, including the per share trading price of our common stock.
In the future, we may attempt to increase our capital resources by making additional offerings of debt or equity securities (or causing our Operating Partnership to issue debt securities), including medium-term notes, senior or subordinated notes, and classes or series of preferred stock. Upon liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will be entitled to receive our available assets prior to distribution to the holders of our common stock. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock and may result in dilution to owners of our common stock. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Our preferred stock, if issued, could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability pay dividends to the holders of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk that our future offerings could reduce the per share trading price of our common stock and dilute their interest in us.

Item 1B.Unresolved Staff Comments.  
None.

Item 2.Properties.  
The information set forth under the captions “Our Properties”"Our Properties" and “Development Pipeline”"Development Pipeline" in Item 1 of this Annual Report on Form 10-K is incorporated by reference herein.


Item 3. Legal Proceedings.  
Item 3.     Legal Proceedings.  
 
The nature of our business exposes our properties, us and the Operating Partnership to the risk of claims and litigation in the normal course of business. Other than routine litigation arising out of the ordinary course of business, we are not presently subject to any material litigation nor, to our knowledge, is any material litigation threatened against us.
 
Item 4. Mine Safety Disclosures.  
Item 4.     Mine Safety Disclosures.  
 
Not Applicable.

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PART II  
 
Item 5.Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Item 5.    Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
Market Information
 
Our common stock trades on the NYSENew York Stock Exchange under the symbol “AHH.” Below is a summary of the high and low prices of our common stock for each quarterly period in the years ended December 31, 2017 and 2016 and the cash distributions per share declared by us with respect to each period.  "AHH."
 
      Distributions
2017 High Low Declared
January 1, 2017—March 31, 2017 $14.96
 $12.92
 $0.19
April 1, 2017—June 30, 2017 14.77
 12.66
 0.19
July 1, 2017—September 30, 2017 14.05
 12.67
 0.19
October 1, 2017—December 31, 2017 16.01
 13.81
 0.19

      Distributions
2016 High Low Declared
January 1, 2016—March 31, 2016 $11.50
 $9.76
 $0.18
April 1, 2016—June 30, 2016 13.84
 11.15
 0.18
July 1, 2016—September 30, 2016 15.50
 12.67
 0.18
October 1, 2016—December 31, 2016 14.98
 12.52
 0.18
On December 31, 2017 and February 21, 2018, the closing price of our common stock as reported on the NYSE was $15.53 and $13.18, respectively. 

Stock Performance Graph
 
The following graph sets forth the cumulative total stockholder return (assuming reinvestment of dividends) to our stockholders during the period May 8, 2013, the date our common stock began trading on the NYSE,December 31, 2015 through December 31, 2017,2020, as well as the corresponding returns on an overall stock market index (Russell 2000 Index)2000) and a peer group index (MSCI US REIT Index). The stock performance graph assumes that $100 was invested on May 8, 2013.December 31, 2015. Historical total stockholder return is not necessarily indicative of future results. The information in this paragraph and the following graph shall not be deemed to be “soliciting material”"soliciting material" or to be “filed”"filed" with the SEC or subject to Regulation 14A or 14C, other than as provided in Item 201 of Regulation S-K, or to the liabilities of Section 18 of the Exchange Act, except to the extent we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or the Exchange Act.


ahh-20201231_g1.jpg
Period Ending
Index12/31/201512/31/201612/31/201712/31/201812/31/201912/31/2020
Armada Hoffler Properties, Inc.100.00146.96165.36158.38217.15139.16
MSCI US REIT100.00108.60114.11108.89137.03126.65
Russell 2000100.00121.31139.08123.76155.35186.36

44
 Period Ending
Index5/8/201312/31/201312/31/201412/31/201512/31/201612/31/2017
Armada Hoffler Properties, Inc.100.0083.3891.11107.42157.87177.63
MSCI US REIT100.0087.62114.24117.12127.19133.64
Russell 2000100.00121.01126.93121.33147.18168.74

Distribution Information
 
Since our initial quarter as a publicly-traded REIT and until the second quarter of 2020, we have made regular quarterly distributions to our stockholders. On April 28, 2020, our board of directors reviewed the Company’s dividend policy and determined that it would be in the best interest of the Company, its stockholders, and its OP unitholders to temporarily suspend the payment of quarterly cash dividends to common stockholders and quarterly distributions to holders of Class A common units as a measure to preserve liquidity in light of the uncertainty resulting from the COVID-19 pandemic. In the third quarter of 2020, as a result of improvement in general economic conditions and our operating performance, our board of directors reinstated quarterly cash dividends on shares of our common stock and Class A common units at $0.11 per share and unit. Declared cash dividends were $0.44 per share for the year ended December 31, 2020. For the first quarter of 2021, our board of directors increased the quarterly dividend to $0.15 per share and unit. We intend to continue to declare quarterly distributions. However, we cannot provide any assurance as to the amount or timing of future distributions. For a description of restrictions on our ability to make distributions, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Facility,” and Note 8, “Indebtedness” to our accompanying consolidated financial statements.



Any future distributions will be at the sole discretion of our board of directors, and their form, timing, and amount, if any, will depend upon a number of factors, including our actual and projected financial condition, liquidity, EBITDA, FFO, Normalized FFO, and results of operations, the revenue we actually receive from our properties, our operating expenses, our debt service requirements, our capital expenditures, prohibitions and other limitations under our financing arrangements, as described above, our REIT taxable income, the annual REIT distribution requirements, applicable law, and such other factors as our board of directors deems relevant. To the extent that our cash available for distribution is less than 90% of our REIT taxable income, we may consider various means to cover any such shortfall, including borrowing under our credit facility or other loans, selling certain of our assets, or using a portion of the net proceeds we receive from offerings of equity, equity-related, or debt securities, or declaring taxable share dividends.
 
To the extent that we make distributions in excess of our earnings and profits, as computed for federal income tax purposes, these distributions will represent a return of capital, rather than a dividend, for federal income tax purposes. Distributions that are treated as a return of capital for federal income tax purposes will reduce the stockholder’s basis in its shares (but not below zero) and therefore can result in the stockholder having a higher gain upon a subsequent sale of such shares. Return of capital distributions in excess of a stockholder’s basis generally will be treated as gain from the sale of such shares for federal income tax purposes.
 
Stockholder Information
 
As of February 21, 2018,19, 2021, there were approximately 106124 holders of record of our common stock. However, because many shares of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial holders of our common stock than record holders. As of February 21, 2018,19, 2021, there were 90101 holders (other than our company) of our OP units. Our OP units are redeemable for cash or, at our election, for shares of our common stock.  
 
Unregistered Sales of Equity Securities
 
None.

Issuer Purchases of Equity Securities


None.


Item 6.
Item 6.    Selected Financial Data.  
The following selected historical consolidated and combined financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated and combined financial statements as of December 31, 2017 and 2016 and for the three years ended December 31, 2017 and the related notes included elsewhere in this Annual Report on Form 10-K.

The selected historical consolidated financial information as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 has been derived from our audited historical financial statements. We completed our initial public offering on May 13, 2013. Due to the timing of our initial public offering, the results of operations, cash flows, FFO, and Normalized FFO for the period prior to May 13, 2013 reflect the operations of our predecessor. Our predecessor was not a legal entity, but rather a combination of certain real estate and construction entities. The historical combined financial data for our predecessor is not necessarily indicative of our results of operations, cash flows or financial position following the completion of the initial public offering.
 

    Not applicable.


 Years Ended December 31, 
 2017 2016 2015 2014 2013
 ($ in thousands, except per share data)
Operating Data:                        
Rental revenues$108,737
 $99,355
 $81,172
 $64,746
 $57,520
General contracting and real estate services revenues194,034
 159,030
 171,268
 103,321
 82,516
Rental expenses25,422
 21,904
 19,204
 16,667
 14,025
Real estate taxes10,528
 9,629
 7,782
 5,743
 5,124
General contracting and real estate services expenses186,590
 153,375
 165,344
 98,754
 78,813
Depreciation and amortization37,321
 35,328
 23,153
 17,569
 14,898
Interest expense(17,439) (16,466) (13,333) (10,648) (12,303)
Loss on extinguishment of debt(50) (82) (512) —
 (2,387)
Gain on real estate dispositions and acquisitions8,087
 30,533
 18,394
 2,211
 9,460
Net income$29,925
 $42,755
 $31,183
 $12,759
 $14,453
Net income attributable to stockholders$21,047
 $28,074
 $19,642
 $7,691
 $7,336
Net income per share—basic and diluted$0.50
 $0.85
 $0.75
 $0.36
 $0.39
Cash dividends declared per share$0.76
 $0.72
 $0.68
 $0.64
 $0.40
Balance Sheet Data:         
Real estate investments, at cost$994,437
 $908,287
 $633,591
 $595,000
 $462,976
Accumulated depreciation(164,521) (139,553) (125,380) (116,099) (105,228)
Net real estate investments829,916
 768,734
 508,211
 478,901
 357,748
Real estate investments held for sale—
 —
 40,232
 8,538
 —
Cash and cash equivalents19,959
 21,942
 26,989
 25,883
 18,882
Notes receivable83,058
 59,546
 7,825
 —
 —
Construction assets24,178
 39,543
 36,623
 19,704
 13,811
Total assets$1,043,123
 $982,468
 689,547
 588,022
 432,210
Indebtedness, net517,272
 522,180
 377,593
 356,345
 274,673
Construction liabilities51,036
 61,297
 54,291
 43,452
 29,680
Total liabilities622,840
 633,490
 463,827
 426,116
 326,689
Total equity420,283
 348,978
 225,720
 161,906
 105,521
Other Data:         
Funds from operations(1)
$59,651
 $47,980
 $35,942
 $28,117
 $19,806
Normalized funds from operations(2)
59,332
 50,921
 38,659
 28,594
 22,812
Cash provided by operating activities58,018
 59,989
 33,266
 31,362
 22,175
Cash used for investing activities(102,426) (226,253) (57,961) (105,306) (47,947)
Cash provided by financing activities42,131
 161,644
 24,401
 80,945
 35,254

(1)For definitions and discussion of FFO and Normalized FFO, see the section below entitled "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations--Non-GAAP Financial Measures." The following table sets forth a reconciliation of our FFO and Normalized FFO to net income, the most directly comparable GAAP equivalent, for the periods presented:

 Years Ended December 31, 
 2017 2016 2015 2014 2013
 ($ in thousands)
Net income$29,925
 $42,755
 $31,183
 $12,759
 $14,453
Depreciation and amortization37,321
 35,328
 23,153
 17,569
 14,898
Gain on operating real estate dispositions(7,595) (30,103) (18,394) (2,211) (9,460)
Real estate joint ventures, net—
 —
 —
 —
 (85)
Funds from operations$59,651
 $47,980
 $35,942
 $28,117
 $19,806
Acquisition, development and other pursuit costs648
 1,563
 1,935
 229
 —
Impairment charges110
 355
 41
 15
 580
Loss on extinguishment of debt50
 82
 512
 —
 2,387
Change in fair value of interest rate derivatives(1,127) 941
 229
 233
 12
Normalized funds from operations$59,332
 $50,921
 $38,659
 $28,594
 $22,785



Item 7.        Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
References to “we,” “our,” “us,”"we," "our," "us," and “our company”"our company" refer to Armada Hoffler Properties, Inc., a Maryland corporation, together with our consolidated subsidiaries, including Armada Hoffler, L.P., a Virginia limited partnership, of which we are the sole general partner and to which we refer in this Annual Report on Form 10-K as our Operating Partnership.
 
Business Description
 
We are a full servicefull-service real estate company with extensive experience developing, building, owning, and managing high-quality,high-
45
quality, institutional-grade office, retail, and multifamily properties in attractive markets throughout the Mid-Atlantic and Southeastern United States. As of December 31, 2017,2020, our stabilized operating property portfolio was comprised of 3836 retail properties, (two of which were not yet stabilized), four7 office properties, and five12 multifamily properties. In addition to our operating property portfolio, we had one1 retail property, 1 office property, threeand 1 multifamily properties, and one mixed-use property in various stages of development, redevelopment, or stabilization as of December 31, 2017.2020. We also provide general contracting services to third parties and invest in development projects through mezzanine lending arrangements.


     Substantially all of our assets are held by, and all of our operations are conducted through, our Operating Partnership. We are the sole general partner of our Operating Partnership and, as of December 31, 2017,2020, we owned, through a combination of direct and indirect interests, 72.0%73.9% of the outstanding OP units in our Operating Partnership.


We elected to be taxed as a REIT for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2013.


Our principal executive office is located at 222 Central Park Avenue, Suite 2100, Virginia Beach, Virginia 23462 in the Armada Hoffler Tower at the Virginia Beach Town Center. In addition, we have a construction officesoffice located at 249 Central Park Avenue, Suite 300, Virginia Beach, Virginia 23462 and 1300 Thames Street, Suite 30, Baltimore, Maryland 21231.21231 in Thames Street Wharf at Harbor Point. The telephone number for our principal executive office is (757) 366-4000. We maintain a website at www.armadahoffler.com.ArmadaHoffler.com. The information on, or accessible through, our website is not incorporated into and does not constitute a part of this report.

COVID-19 Update

See Part I, Item 1 “Business—Impact of COVID-19 on Our Business” for more information on the impact of COVID-19 on our company.
 
Critical Accounting Policies and Estimates
 
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements that have been prepared in accordance with GAAP. The Company's accounting policies are more fully described in Note 2 of our consolidated financial statements in Item 8 of this Annual Report on Form 10-K. As disclosed in Note 2, the preparation of these financial statements requires us to exercise our best judgment in making estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. We evaluate our estimates on an ongoing basis, based upon current available information. Actual results could differ from these estimates.
 
We believe the following accounting policies and estimates are the most critical to understanding our reported financial results as their effect on our financial condition and results of operations is material.


    
Revenue Recognition
Rental Revenues
 
We lease our properties under operating leases and recognize base rents on a straight-line basis over the lease term. We also recognize revenue from tenant recoveries, through which tenants reimburse us for expenses paid by us such as utilities, janitorial, repairs and maintenance, security and alarm, parking lot and grounds, general and administrative, management fees, insurance, and real estate taxes on an accrual basis. Our rental revenues are reduced by the amount of any leasing incentives on a straight-line basis over the term of the applicable lease. We include a renewal period in the lease term only if it appears at lease inception that the renewal is reasonably assured.certain. We begin recognizing rental revenue when the tenant has the right to take possession of or controls the physical use of the property under lease. We maintain control of the physical use of the property under lease if we serve as the general contractor for the tenant.


Rental revenue is recognized subject to management’s evaluation of tenant credit risk. The extended collection period for accrued straight-line rental revenue along with our evaluation of tenant credit risk may result in the non-recognitionnonrecognition of all or a portion of straight-line rental revenue until the collection of substantially all such revenue for a tenant is reasonably assured.probable.
 
General Contracting and Real Estate Services Revenues
 
We recognize general contracting revenues as a customer obtains control of promised goods or services in an amount that reflects the consideration we expect to receive in exchange for those goods or services. For each construction contract, we identify the performance obligations, which typically include the delivery of a single building constructed according to the specifications of the contract. We estimate the total transaction price, which generally includes a fixed contract price and may
46
also include variable components such as early completion bonuses, liquidated damages, or cost savings to be shared with the customer. Variable components of the contract price are included in the transaction price to the extent that it is probable that a significant reversal of revenue on construction contractswill not occur. We recognize the estimated transaction price as revenue as we satisfy our performance obligations; we estimate our progress in satisfying performance obligations for each contract using the percentage-of-completion method. Using thisinput method, we recognize revenue and an estimated profit as construction contract costs are incurred based on the proportion of incurred costs relative to total estimated construction costs underat completion. Construction contract costs include all direct material, direct labor, subcontract costs, and overhead costs directly related to contract performance. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, are all significant judgments that may result in revisions to costs and income and are recognized in the period in which they are determined. Additionally, the estimated costs at completion are affected by management’s forecasts of anticipated costs to be incurred and contingency reserves for exposures related to unknown costs, such as design deficiencies and subcontractor defaults. The estimated variable consideration is also affected by claims and unapproved change orders, which may result from changes in the scope of the contract. Provisions for estimated losses on uncompleted contracts are recognized immediately in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income and are recognized in the period in which they are determined.
    We include profit incentives in revenues when their realization is probable and the amount can be reasonably estimated. General contracting andrecognize real estate services revenues from property development and management as we satisfy our performance obligations under these service arrangements.

    We assess whether multiple contracts with a single counterparty may be combined into a single contract for the revenue is recognized subject to management’s evaluationrecognition purposes based on factors such as the timing of customer credit risk.the negotiation and execution of the contracts and whether the economic substance of the contracts was contemplated separately or in tandem.


Operating Property Acquisitions
 
    Acquisitions of operating properties have been and will generally be accounted for as acquisitions of a group of assets, with costs incurred to effect an acquisition, including title, legal, accounting, brokerage commissions, and other related costs being capitalized as part of the cost of the assets acquired. In connection with operating property acquisitions, we identify and recognize all assets acquired and liabilities assumed at their estimatedrelative fair values as of the acquisition date. The purchase price allocations to tangible assets, such as land, site improvements, and buildings and improvements, are presented within income producing property in the consolidated balance sheets and depreciated over their estimated useful lives. Acquired lease intangible assets andare presented as a separate component of assets on the consolidated balance sheets. Acquired lease intangible liabilities are presented within other assets and liabilities in the consolidated balance sheets and amortized over their respective lease terms.sheets. We amortize in-place lease assets as depreciation and amortization expense on a straight-line basis over the remaining term of the related leases. We amortize above-market lease assets as reductions to rental revenues on a straight-line basis over the remaining term of the related leases. We amortize below-market lease liabilities as increases to rental revenues on a straight-line basis over the remaining term of the related leases. We amortize below-market ground lease assets as increases to rental expenses on a straight-line basis over the remaining term of the related leases. Prior to October 1, 2016, we expensed all costs incurred related to operating property acquisitions. On October 1, 2016, we adopted newly issued accounting guidance that allows capitalization ofWe capitalize the costs related to operating property acquisitions.acquisitions that do not meet the definition of a business.
 
We value land based on a market approach, looking to recent sales of similar properties, adjusting for differences due to location, the state of entitlement, and the shape and size of the parcel. Improvements to land are valued using a replacement cost approach. The approach applies industry standard replacement costs adjusted for geographic specific considerations and reduced by estimated depreciation. The value of buildings acquired is estimated using the replacement cost approach, assuming the buildings were vacant at acquisition. The replacement cost approach considers the composition of the structures acquired, adjusted for an estimate of depreciation. The estimate of depreciation is made considering industry standard information and depreciation curves for the identified asset classes. The value of acquired lease intangible assets and liabilities considers the estimated cost of leasing the properties as if the acquired buildings were vacant, as well as the value of the current leases relative to market-rate leases. The in-place lease value is determined using an estimated total lease-up time and lost rental revenues during such time. The value of current leases relative to market-rate leases is based on market rents obtained for market comparables. Given the significance of unobservable inputs used in the valuation of acquired real estate assets, we classify them as Level 3 inputs in the fair value hierarchy.
 
We value debt assumed in connection with operating property acquisitions based on a discounted cash flow analysis of the expected cash flows of the debt. Such analysis considers the contractual terms of the debt, including the period to maturity,

credit characteristics, and uses observable market-based inputs, including interest rate information asother terms of the acquisition date. We also consider credit valuation adjustments for potential nonperformance risk. We classify the inputs used to value debt assumed in connection with operating property acquisitions asarrangements, which are Level 23 inputs in the fair value hierarchy as they are predominantly observable and market-based.hierarchy.
 
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Real Estate Project Costs
 
We capitalize direct and certain indirect costs clearly associated with the development, redevelopment, construction, leasing, or expansion of our real estate assets. Capitalized project costs include direct material, labor, subcontract costs, real estate taxes, insurance, utilities, ground rent, interest on borrowing obligations, and salaries and related personnel costs.
 
We capitalize direct and indirect project costs associated with the initial construction or redevelopment of a property up to the time the property is substantially complete and ready for its intended use. We believe the completion of the building shell is the proper basis for determining substantial completion of initial construction.
 
We also capitalize direct and indirect costs, including interest costs, on vacant space during extended lease-up periods after construction of the building shell has been completed if costs are being incurred to prepare the vacant space for its intended use. If costs and activities incurred to prepare the vacant space for its intended use cease, then cost capitalization is also discontinued until such activities are resumed. Once necessary work has been completed on a vacant space, project costs are no longer capitalized. In addition, all leasing commissions paid to third parties for new leases or lease renewals are capitalized.
 
We depreciate buildings on a straight-line basis over 39 years and tenant improvements over the shorter of their estimated useful lives or the term of the related lease.
 
Real Estate Impairment
 
We evaluate our real estate assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If such an evaluation is necessary, we compare the carrying amount of any such real estate asset with the undiscounted expected future cash flows that are directly associated with, and that are expected to arise as a direct result of, its use and eventual disposition. Our estimate of the expected future cash flows attributable to a real estate asset is based upon, among other things, our estimates regarding future market conditions, rental rates, occupancy levels, tenant improvements, leasing commissions, tenant concessions, and assumptions regarding the residual value of our properties. If the carrying amount of a real estate asset exceeds its associated undiscounted expected future cash flows, we recognize an impairment loss to reduce the carrying amount of the real estate asset to its fair value based on marketplace participant assumptions.

Adoption of New or Revised Accounting Standards    Interest Income
    
As an emerging growth company under    Interest income on notes receivable is accrued based on the JOBS Act,contractual terms of the loans and when, in the opinion of management, it is deemed collectible. Many loans provide for accrual of interest that will not be paid until maturity of the loan. Interest is recognized on these loans at the accrual rate subject to management's determination that accrued interest is ultimately collectible, based on the underlying collateral and the status of development activities, as applicable. If management cannot make this determination, recognition of interest income may be fully or partially deferred until it is ultimately paid.

    Allowance for Loan Losses

    We evaluate the collectability of both the interest on and principal of each of our notes receivable based primarily upon the value of the underlying development project. We consider factors such as the progress of development activities, including leasing activities, projected development costs, current and projected loan balances. We also consider historical industry data, such as loan defaults and losses experienced on loans secured by other development projects, and current economic conditions that may affect the collectability of the remaining cash flows. At the end of each reporting period, the Company measures expected credit losses to be incurred over the remaining contractual term based on the risk rating of each loan. If a loan is rated as Substandard, we can electthen estimate expected credit losses as the difference between the amortized cost basis of the outstanding loan and the estimated projected sales proceeds of the underlying collateral.

    Recent Accounting Pronouncements

    For a summary of recent accounting pronouncements and the anticipated effects on our consolidated financial statements see Note 2 to adopt new or revised accounting standards as they are effective for private companies. However, we have elected to opt outour Consolidated Financial Statements included in Item 8 of such extended transition period. Therefore, we will adopt new or revised accounting standards as they are effective for public companies. This election is irrevocable.this Form 10-K.


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Segment Results of Operations
 
As of December 31, 2017,2020, we operated our business in four segments: (i) office real estate, (ii) retail real estate, (iii) multifamily residential real estate, and (iv) general contracting and real estate services that are conducted through our taxable REIT subsidiaries (“TRS”("TRS"). Net operating income (segment revenues minus segment expenses) (“NOI”("NOI") is the measure used by management to assess segment performance and allocate our resources among our segments. NOI is not a measure of operating income or cash flows from operating activities as measured by GAAP and is not indicative of cash available to fund cash needs. As a result, NOI should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate NOI in the same manner. We consider NOI to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of our real estate and construction businesses. See Note 3 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for a reconciliation of NOI to net income, the most directly comparable GAAP measure.
 
We define same store properties as those that we owned and operated and that were stabilized for the entirety of both periods compared. We generally consider a property to be stabilized upon the earlier of: (i) the quarter after the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy. Additionally, any property that is substantially taken out of service for the purpose of redevelopment is no longer considered stabilized until the redevelopment activities are complete, the asset is placed back into service, and the stabilization criteria above are again met. A property may also be fully or partially taken out of service as a result of a partial disposition, depending on the significance of the portion of the property disposed. Finally, any property classified as held for sale is taken out of service for the purpose of computing same store operating results.

    This section of this Form 10-K generally discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019. Discussions of 2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this Form 10-K can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
 
Office Segment Data

Office rental revenues, property expenses, and NOI for the years ended December 31, 2020, 2019 and 2018 were as follows ($ in thousands): 
Years Ended December 31, 
2017 2016 2015 Years Ended December 31, 
($ in thousands) 202020192018
Rental revenues$19,207
 $20,929
 $31,534
Rental revenues$43,494 $33,269 $20,701 
Property expenses7,342
 7,560
 9,888
Property expenses15,910 12,193 7,892 
NOI$11,865
 $13,369
 $21,646
NOI$27,584 $21,076 $12,809 
Square feet(1)
799,855
 847,240
 916,316
Square feet(1)
1,305,933 1,307,255 796,509 
Occupancy(1)
89.9% 86.8% 95.8%
Occupancy(1)
97.0 %96.6 %93.3 %

(1)Stabilized properties as of the end of the periods presented.
(1)Stabilized properties as of the end of the periods presented.
 
Rental revenues for the year ended December 31, 2017 decreased $1.72020 increased $10.2 million compared to the year ended December 31, 2016.2019. NOI for the year ended December 31, 2017 decreased $1.52020 increased $6.5 million compared to the year ended December 31, 2016.2019. The decreasesincreases in rental revenues and NOI resulted from the dispositionacquisition of four properties, including Richmond TowerOne City Center in March 2019, the commencement of operations at Brooks Crossing office in April 2019, the acquisition of Thames Street Wharf in June 2019, and Oyster Point, which occurredthe commencement of operations at a portion of Wills Wharf in the first quarter and third quarterJune 2020.

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Rental revenues for the year ended December 31, 2016 decreased $10.6 million compared to the year ended December 31, 2015. NOI for the year ended December 31, 2016 decreased $8.3 million compared to the year ended December 31, 2015. The decreases in rental revenues and NOI resulted from the dispositions of Richmond Tower and Oyster Point, which occurred in the first quarter and third quarter of 2016, respectively.


Office Same Store Results
 
Office same store rental revenues, property expenses, and NOI for the comparative years ended December 31, 20172020 and 20162019 and December 31, 20162019 and 20152018 were as follows:follows (in thousands):
 
Years Ended  
 Years Ended  
December 31,   
 December 31,   
 Years Ended Years Ended 
2017 (1)
 
2016 (1)
 Change 
2016 (2)
 
2015 (2)
 Change December 31,  December 31,  
($ in thousands)
2020 (1)
2019 (1)
Change
2019 (2)
2018 (2)
Change
Rental revenues$13,615
 $14,323
 $(708) $15,476
 $15,565
 $(89)Rental revenues$21,044 $21,239 $(195)$21,239 $20,701 $538 
Property expenses5,435
 5,273
 162
 5,430
 5,709
 (279)Property expenses7,771 7,735 36 7,735 7,507 228 
Same Store NOI$8,180
 $9,050
 $(870) $10,046
 $9,856
 $190
Same Store NOI$13,273 $13,504 $(231)$13,504 $13,194 $310 
Non-Same Store NOI3,685
 4,319
 (634) 3,323
 11,790
 (8,467)Non-Same Store NOI14,311 7,572 6,739 7,572 (385)7,957 
Segment NOI$11,865
 $13,369
 $(1,504) $13,369
 $21,646
 $(8,277)Segment NOI$27,584 $21,076 $6,508 $21,076 $12,809 $8,267 

(1)Same store excludes 4525 Main Street, the Richmond Tower building, the Oyster Point building, and the Commonwealth of Virginia-Chesapeake and Commonwealth of Virginia-Virginia Beach office buildings.
(2)Same store excludes 4525 Main Street, the Richmond Tower building, the Oyster Point building, the Oceaneering International building, and the Sentara Williamsburg medical office building.
(1)Same store excludes One City Center, Brooks Crossing Office, Thames Street Wharf, and Wills Wharf (partially in operation beginning June 1, 2020).
(2)Same store excludes One City Center, Brooks Crossing Office, Thames Street Wharf, and Wills Wharf (which was under development).
  
Same store rental revenues and NOI for the year ended December 31, 20172020 decreased compared to the year ended December 31, 20162019 due to the expansion and relocation of a tenantthe Company’s construction division to newly available space within the Armada Hoffler Tower. The Company’s construction division previously occupied space at an adjacent property that is classified as retail for segment reporting purposes. Rental revenue from One Columbus tothe Company’s construction division is eliminated for consolidation purposes. This decrease was partially offset by increased occupancy at 4525 Main Street during the fourth quarter of 2016 and the expansion and relocation of another tenant from Two Columbus to 4525 Main Street during the third quarter of 2017. For the year ended December 31, 2017, the NOI from these tenants that relocated to 4525 Main Street are included in Non-Same Store NOI. In addition, decreased occupancy at the Armada Hoffler Tower contributed to the period-over-period decrease in office same store NOI. One Columbus.

Same store rental revenues and NOI for the year ended December 31, 2016 decreased slightly compared to the year ended December 31, 2015 because of lower occupancy at One Columbus and Armada Hoffler Tower in the Town Center of Virginia Beach. The decrease in rental revenues was more than offset by decreases in property expenses, specifically utilities, which were lower due to lower usage in 2016.
Retail Segment Data

Retail rental revenues, property expenses, and NOI for the years ended December 31, 2020, 2019 and 2018 were as follows ($ in thousands): 
Years Ended December 31, 
2017 2016 2015 Years Ended December 31, 
($ in thousands) 202020192018
Rental revenues$63,109
 $56,511
 $32,064
Rental revenues$73,032 $77,593 $67,959 
Property expenses16,409
 14,511
 8,843
Property expenses18,813 19,572 17,704 
NOI$46,700
 $42,000
 $23,221
NOI$54,219 $58,021 $50,255 
Square feet(1)
3,498,480
 3,592,558
 1,643,058
Square feet(1)
3,651,213 4,169,784 3,645,798 
Occupancy(1)
96.5% 95.8% 95.5%
Occupancy(1)
94.7 %96.9 %96.2 %

(1)Stabilized properties as of the end of the periods presented.
(1)Stabilized properties as of the end of the periods presented.
 
Rental revenues for the year ended December 31, 2017 increased $6.62020 decreased $4.6 million compared to the year ended December 31, 2016.2019. NOI for the year ended December 31, 2017 increased $4.72020 decreased $3.8 million compared to the year ended December 31, 2016.2019. The increasesdecreases in rental revenues and NOI resulted primarily from property acquisitions and new real estate placed into service during 2017 and 2016. During the year ended December 31, 2017, we acquireddisposition of the outparcel phase of Wendover Village. During the year ended December 31, 2016, we acquired the 11-propertyseven-property retail portfolio Southgate Square, Southshore Shops,in May 2020 and our decision to terminate the leases for Regal Cinemas in Columbus Village II (part of the Town Center of Virginia Beach) and Renaissance SquareHarrisonburg. The Company has written off the accounts receivable for this tenant as an adjustment to rental revenue totaling $1.0 million. The Company chose to reinstate the leases with Regal Cinemas under modified terms favorable to the Company for Harrisonburg on November 18, 2020 and placed into service Brooks Crossingfor Columbus Village on January 25, 2021. The tenant is not currently paying rent, and Lightfoot Marketplace.

Rental revenueswe will recognize revenue on a cash basis. In addition to the amounts recorded for Regal Cinemas, the Company recognized a $1.1 million increase in the allowance for bad debt (recorded as an adjustment to rental revenues) as a result of the COVID-19 pandemic for the year ended December 31, 2016 increased $24.4 million compared to2020. The decrease for 2020 was partially offset by the year ended December 31, 2015. NOI forcommencement of operations at Market at Mill Creek in April 2019 and the year ended December 31, 2016 increased $18.8 million compared to the year ended December 31, 2015. The increasesacquisition of Red Mill Commons and Marketplace at Hilltop in rental revenues and NOI resulted primarily from property acquisitions and new real estate placed into service. During the year ended December 31, 2016, we acquired the 11-property retail portfolio, Southgate Square, Southshore Shops, Columbus Village II, and Renaissance Square and placed into service Brooks Crossing and Lightfoot Marketplace.May 2019.

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Retail Same Store Results
 
Retail same store rental revenues, property expenses, and NOI for the comparative years ended December 31, 20172020 and 20162019 and December 31, 20162019 and 20152018 were as follows:follows (in thousands): 
 
Years Ended  
 Years Ended  
December 31,   
 December 31,   
 Years Ended Years Ended 
2017 (1)
 
2016 (1)
 Change 
2016 (2)
 
2015 (2)
 Change December 31,  December 31,  
($ in thousands)
2020 (1)
2019 (1)
Change
2019 (2)
2018 (2)
Change
Rental revenues$37,707
 $37,154
 $553
 $26,316
 $25,984
 $332
Rental revenues$49,171 $51,970 $(2,799)$57,651 $56,435 $1,216 
Property expenses10,757
 10,241
 516
 7,579
 7,485
 94
Property expenses12,327 12,681 (354)13,247 13,077 170 
Same Store NOI$26,950
 $26,913
 $37
 $18,737
 $18,499
 $238
Same Store NOI$36,844 $39,289 $(2,445)$44,404 $43,358 $1,046 
Non-Same Store NOI19,750
 15,087
 4,663
 23,263
 4,722
 18,541
Non-Same Store NOI17,375 18,732 (1,357)13,617 6,897 6,720 
Segment NOI$46,700
 $42,000
 $4,700
 $42,000
 $23,221
 $18,779
Segment NOI$54,219 $58,021 $(3,802)$58,021 $50,255 $7,766 

(1)Same store excludes the 11-property retail portfolio, Southgate Square, Lightfoot Marketplace, Southshore Shops, Brooks Crossing, Columbus Village II, Renaissance Square, and the outparcel phase of Wendover Village.
(2)Same store excludes the 11-property retail portfolio, Brooks Crossing, Columbus Village, Columbus Village II, Greentree Shopping Center, Lightfoot Marketplace, Providence Plaza, Perry Hall Marketplace, Renaissance Square, Sandbridge Commons, Socastee Commons, Southgate Square, Southshore Shops and Stone House Square.
(1)Same store excludes Apex Entertainment (formerly Dick’s at Town Center) due to redevelopment, Brooks Crossing Retail, Columbus Village (due to redevelopment), Lightfoot Marketplace (disposed in August 2019), Market at Mill Creek, Marketplace at Hilltop and Red Mill Commons (acquired in May 2019), Nexton Square (acquired in September 2020), Premier Retail, Waynesboro Commons (disposed in April 2019), the additional outparcel phase of Wendover Village (acquired in February 2019), and the seven-property retail portfolio that was disposed in May 2020 (Alexander Pointe, Bermuda Crossroads, Gainsborough Square, Harper Hill Commons, Indian Lakes Crossing, Renaissance Square, and Stone House Square).
(2)Same store excludes Broad Creek Shopping Center, Brooks Crossing Retail, Premier Retail, Lexington Square, Columbus Village (due to redevelopment), the additional outparcel phase of Wendover Village (acquired in February 2019), Market at Mill Creek, Red Mill Commons and Marketplace at Hilltop (acquired in May 2019), Parkway Centre and Indian Lakes Crossing (acquired in January 2018), Waynesboro Commons (disposed in April 2019), and Lightfoot Marketplace (disposed in August 2019).

    
Same store rental revenues and NOI for the year ended December 31, 2017 increased2020 decreased compared to the year ended December 31, 2016 primarily because of higher occupancy at Sandbridge Commons, Broad Creek, Hanbury Village, North Point, Providence, and 249 Central Park. These increases were partially offset by lower occupancy at Columbus Village and increased administrative expense, maintenance and repair expense, and bad debt expense. 
Same store2019. The decreases in rental revenues and NOI resulted primarily from our decision to terminate the leases for Regal Cinemas in Columbus Village II (part of the Town Center of Virginia Beach) and Harrisonburg as discussed above. In addition to the amounts recorded for Regal Cinemas, the Company recognized a $0.9 million increase in the allowance for bad debt (recorded as an adjustment to rental revenues) as a result of the COVID-19 pandemic for the year ended December 31, 2016 increased compared to the year ended December 31, 2015 primarily because of higher occupancy at Broad Creek, Hanbury Village, North Point, Parkway Marketplace, and Fountain Plaza. These increases were partially offset by lower occupancy at 249 Central Park.2020.
 
Multifamily Segment Data

    Multifamily rental revenues, property expenses, and NOI for the years ended December 31, 2020, 2019 and 2018 were as follows ($ in thousands): 
Years Ended December 31, 
2017 2016 2015 Years Ended December 31, 
($ in thousands) 202020192018
Rental revenues$26,421
 $21,915
 $17,574
Rental revenues$49,962 $40,477 $28,298 
Property expenses12,199
 9,462
 8,255
Property expenses22,373 17,528 13,009 
NOI$14,222
 $12,453
 $9,319
NOI$27,589 $22,949 $15,289 
Apartment units1,266
 1,266
 1,109
Apartment units/bedsApartment units/beds3,527 2,238 1,230 
Occupancy92.9% 94.3% 94.2%Occupancy92.5 %95.6 %97.3 %
 

Rental revenues for the year ended December 31, 20172020 increased $4.5$9.5 million compared to the year ended December 31, 2016.2019. NOI increased $1.8$4.6 million compared to the year ended December 31, 2016.2019. The increases in rental revenues and NOI resulted primarily from the deliveryacquisition of Johns Hopkins Village1405 Point in April 2019, the commencement of operations at Hoffler Place in August 2016.2019, the commencement of operations at Summit Place in August 2020, and the acquisition of Edison Apartments and The Residences at Annapolis Junction in October 2020. Occupancy also increased at Greenside Apartments, which was in lease-up during much of 2019.
        
Rental revenues for the year ended December 31, 2016 increased $4.3 million compared to the year ended December 31, 2015. NOI increased $3.1 million compared to the year ended December 31, 2015. The increases in rental revenues and NOI resulted primarily from the delivery
51
Table of Johns Hopkins Village in August 2016. The increase from Johns Hopkins Village was partially offset by the sale of Whetstone Apartments in May 2015.Contents

Multifamily Same Store Results
 
Multifamily same store rental revenues, property expenses, and NOI for the comparative years ended December 31, 20172020 and 20162019 and December 31, 20162019 and 20152018 were as follows:follows (in thousands):
 
Years Ended  
 Years Ended  
December 31,   
 December 31,   
 Years Ended Years Ended 
2017 (1)
 
2016 (1)
 Change 
2016 (2)
 
2015 (2)
 Change December 31,  December 31,  
($ in thousands)
2020 (1)
2019 (1)
Change
2019 (2)
2018 (2)
Change
Rental revenues$18,892
 $19,194
 $(302) $12,221
 $12,158
 $63
Rental revenues$21,542 $21,849 $(307)$21,849 $20,241 $1,608 
Property expenses8,876
 8,410
 466
 5,325
 5,249
 76
Property expenses9,157 8,666 491 8,666 8,332 334 
Same Store NOI$10,016
 $10,784
 $(768) $6,896
 $6,909
 $(13)Same Store NOI$12,385 $13,183 $(798)$13,183 $11,909 $1,274 
Non-Same Store NOI4,206
 1,669
 2,537
 5,557
 2,410
 3,147
Non-Same Store NOI15,204 9,766 5,438 9,766 3,380 6,386 
Segment NOI$14,222
 $12,453
 $1,769
 $12,453
 $9,319
 $3,134
Segment NOI$27,589 $22,949 $4,640 $22,949 $15,289 $7,660 

(1)Same store excludes Johns Hopkins Village.
(2)Same store excludes Encore Apartments, Johns Hopkins Village, Liberty Apartments and Whetstone Apartments.
(1)Same store excludes 1405 Point, The Residences at Annapolis Junction, and Edison Apartments (acquired in October 2020), Greenside Apartments, Hoffler Place, Premier Apartments, Summit Place, and The Cosmopolitan (due to redevelopment).
(2)Same store excludes Greenside Apartments, Premier Apartments, 1405 Point, Hoffler Place, and The Cosmopolitan.

    
Same store rental revenues and NOI for the year ended December 31, 20172020 decreased compared to the year ended December 31, 2016 primarily because of lower occupancy at2019. The Cosmopolitandecreases in the Town Center of Virginia Beach attributed to the loss of retail tenants at the property and construction activities at an adjacent property. In addition, NOI decreased due to higher expenses for repairs and maintenance, property taxes, administration, and utilities.
Same store rental revenues for the year ended December 31, 2016and NOI resulted primarily from decreased occupancy and increased compared to the year ended December 31, 2015 because of higher rental rates at Smith's Landing. This increase was partially offset by lower occupancy at The Cosmopolitan in the Town Center of Virginia Beach. Same store NOI decreased slightly due to an increase in real estate taxes at The Cosmopolitan.Johns Hopkins Village.
 
General Contracting and Real Estate Services Segment Data

 Years Ended December 31, 
 2017 2016 2015
 ($ in thousands)
Segment revenues$194,034
 $159,030
 $171,268
Gross profit$7,444
 $5,655
 $5,924
Operating margin3.8% 3.6% 3.5%
Construction backlog$49,167
 $217,718
 $83,433
General contracting and real estate services revenues, expenses, and gross profit for the years ended December 31, 2020, 2019 and 2018 were as follows ($ in thousands):
 
 Years Ended December 31, 
 202020192018
Segment revenues$217,146 $105,859 $76,359 
Gross profit$7,674 $4,321 $2,731 
Operating margin3.5 %4.1 %3.6 %
Construction backlog$71,258 $242,622 $165,863 
Segment revenues for the year ended December 31, 20172020 increased $35.0$111.3 million compared to the year ended December 31, 2016.2019. Gross profit for the year ended December 31, 20172020 increased $1.8$3.4 million compared to the year ended December 31, 2016.2019. The increase in segment revenues resulted primarily from work performed in 2020 on several large projects in the backlog as of December 31, 20162019, including Annapolis Junction, PointInterlock Commercial, Solis Apartments at Interlock, and the 27th Street Apartments & Garage projects, which were executed in 2019 and City Center.experienced increased volume in 2020.
    

Segment revenues for the year ended December 31, 2016 decreased $12.2 million compared to the year ended December 31, 2015. Gross profit for the year ended December 31, 2016 decreased $0.3 million compared to the year ended December 31, 2015. The decrease in segment revenues resulted from lower volume on our construction contracts driven by the completion of the Exelon construction project in the Inner Harbor of Baltimore. The decrease in segment revenue was slightly offset by higher operating margins.

The changes in construction backlog for each of the three years ended December 31, 20172020, 2019 and 2018 were as follows:follows (in thousands):  
 
 Years Ended December 31, 
 202020192018
Beginning backlog$242,622 $165,863 $49,167 
New contracts/change orders45,882 182,495 192,852 
Work performed(217,246)(105,736)(76,156)
Ending backlog$71,258 $242,622 $165,863 

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 Years Ended December 31, 
 2017 2016 2015
 ($ in thousands)
Beginning backlog$217,718
 $83,433
 $159,139
New contracts/change orders25,224
 293,115
 95,356
Work performed(193,775) (158,830) (171,062)
Ending backlog$49,167
 $217,718
 $83,433
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During the year ended December 31, 2017,2020, we performed work on several significant projects, including Annapolis Junction, Point27th Street Apartments, Interlock Commercial, and City Center, resulting in work performed of $50.2Solis Apartments at Interlock, which used $52.2 million, $40.7$43.8 million, and $31.3$46.0 million, respectively.     respectively, of the backlog as of December 31, 2020.


During the year ended December 31, 2016,2019, we executed several new contracts including Annapolis Junctionfor the Bellyard Hotel at Interlock, Boulder Lakeside Apartments, and the Dinwiddie County administration building,27th Street Apartments & Garage projects, which added $50.2$28.0 million, $35.4 million, and $23.0$79.3 million, respectively, to the December 31, 20162019 backlog.

During the year ended December 31, 2015, we added $45.9 million to backlog for the construction of a new hotel at the Oceanfront of Virginia Beach, Virginia for a related party development group. Construction was completed in the summer of 2017. As of December 31, 2016 and 2015, we had $7.8 million and $40.4 million, respectively, of backlog related to the Oceanfront hotel construction project.

Consolidated Results of Operations
 
The following table summarizes our results of operations for the years ended December 31, 2017, 2016,2020, 2019, and 2015:2018: 
 
Years Ended December 31,  2017 2016 Years Ended December 31, 20202019
2017 2016 2015 Change Change 202020192018ChangeChange
($ in thousands) (in thousands)
Revenues 
  
  
  
  
Revenues     
Rental revenues$108,737
 $99,355
 $81,172
 $9,382
 $18,183
Rental revenues$166,488 $151,339 $116,958 $15,149 $34,381 
General contracting and real estate services revenues194,034
 159,030
 171,268
 35,004
 (12,238)General contracting and real estate services revenues217,146 105,859 76,359 111,287 29,500 
Total revenues302,771
 258,385
 252,440
 44,386
 5,945
Total revenues383,634 257,198 193,317 126,436 63,881 
Expenses         Expenses     
Rental expenses25,422
 21,904
 19,204
 3,518
 2,700
Rental expenses38,960 34,332 27,222 4,628 7,110 
Real estate taxes10,528
 9,629
 7,782
 899
 1,847
Real estate taxes18,136 14,961 11,383 3,175 3,578 
General contracting and real estate services expenses186,590
 153,375
 165,344
 33,215
 (11,969)General contracting and real estate services expenses209,472 101,538 73,628 107,934 27,910 
Depreciation and amortization37,321
 35,328
 23,153
 1,993
 12,175
Depreciation and amortization59,972 54,564 39,913 5,408 14,651 
Amortization of right-of-use assets - finance leasesAmortization of right-of-use assets - finance leases586 377 — 209 377 
General and administrative expenses10,435
 9,552
 8,397
 883
 1,155
General and administrative expenses12,905 12,392 11,431 513 961 
Acquisition, development and other pursuit costs648
 1,563
 1,935
 (915) (372)Acquisition, development and other pursuit costs584 844 352 (260)492 
Impairment charges110
 355
 41
 (245) 314
Impairment charges666 252 1,619 414 (1,367)
Total expenses271,054
 231,706
 225,856
 39,348
 5,850
Total expenses341,281 219,260 165,548 122,021 53,712 
Gain on real estate dispositionsGain on real estate dispositions6,388 4,699 4,254 1,689 445 
Operating income31,717
 26,679
 26,584
 5,038
 95
Operating income48,741 42,637 32,023 6,104 10,614 
Interest income7,077
 3,228
 126
 3,849
 3,102
Interest income19,841 23,215 10,729 (3,374)12,486 
Interest expense(17,439) (16,466) (13,333) (973) (3,133)
Loss on extinguishment of debt(50) (82) (512) 32
 430
Gain on real estate dispositions8,087
 30,533
 18,394
 (22,446) 12,139
Change in fair value of interest rate derivatives1,127
 (941) (229) 2,068
 (712)
Other income131
 147
 119
 (16) 28
Interest expense on indebtednessInterest expense on indebtedness(30,120)(30,776)(19,087)656 (11,689)
Interest expense on finance leasesInterest expense on finance leases(915)(568)— (347)(568)
Equity in income of unconsolidated real estate entitiesEquity in income of unconsolidated real estate entities— 273 372 (273)(99)
Change in fair value of derivatives and otherChange in fair value of derivatives and other(1,130)(3,599)(951)2,469 (2,648)
Provision for unrealized credit lossesProvision for unrealized credit losses(256)— — (256)— 
Other income (expense), netOther income (expense), net515 585 377 (70)208 
Income before taxes30,650
 43,098
 31,149
 (12,448) 11,949
Income before taxes36,676 31,767 23,463 4,909 8,304 
Income tax benefit (provision)(725) (343) 34
 (382) (377)
Income tax benefitIncome tax benefit283 491 29 (208)462 
Net income$29,925
 $42,755
 $31,183
 $(12,830) $11,572
Net income36,959 32,258 23,492 4,701 8,766 
Net income attributable to noncontrolling interests in investment entitiesNet income attributable to noncontrolling interests in investment entities230 (213)— 443 (213)
Preferred stock dividendsPreferred stock dividends(7,349)(2,455)— (4,894)(2,455)
Net income attributable to common stockholders and OP Unit holdersNet income attributable to common stockholders and OP Unit holders$29,840 $29,590 $23,492 $250 $6,098 
 
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Rental Revenues. Rental revenues by segment for the years ended December 31, 2017, 2016,2020, 2019, and 20152018 were as follows:follows (in thousands): 
 Years Ended December 31, 20202019
 202020192018ChangeChange
Office$43,494 $33,269 $20,701 $10,225 $12,568 
Retail73,032 77,593 67,959 (4,561)9,634 
Multifamily49,962 40,477 28,298 9,485 12,179 
 $166,488 $151,339 $116,958 $15,149 $34,381 
 
 Years Ended December 31,  2017 2016
 2017 2016 2015 Change Change
 ($ in thousands)
Office$19,207
 $20,929
 $31,534
 $(1,722) $(10,605)
Retail63,109
 56,511
 32,064
 6,598
 24,447
Multifamily26,421
 21,915
 17,574
 4,506
 4,341
 $108,737
 $99,355
 $81,172
 $9,382
 $18,183
Rental revenues increased $9.4$15.1 million during the year ended December 31, 20172020 compared to the year ended December 31, 2016. The decrease in office rental revenues resulted primarily from the dispositions of Richmond Tower, Oyster Point, Commonwealth of Virginia-Chesapeake, and Commonwealth of Virginia-Virginia Beach properties, which we sold in 2016 and 2017.2019. The increase in retailoffice rental revenues resulted primarily from property acquisitions and new real estate placed into service. During the year ended December 31, 2016, we acquired the 11-propertydevelopment deliveries completed during 2019 and 2020 as discussed above. The decrease in retail portfolio, Southgate Square, Southshore Shops, Columbus Village II and Renaissance Square and placed into service Brooks Crossing and Lightfoot Marketplace. During the year ended December 31, 2017, we acquired the outparcel phase of Wendover Village. The increase in

multifamily rental revenues resulted primarily from the deliverydisposition of Johns Hopkinsthe seven-property retail portfolio in May 2020 and the Company’s decision to terminate the leases for Regal Cinemas in Columbus Village II (part of the Town Center of Virginia Beach) and Harrisonburg as discussed above. The Company has written off the accounts receivable for this tenant as an adjustment to rental revenue totaling $1.0 million. In addition to the amounts recorded for Regal Cinemas, the Company recognized a $1.1 million increase in August 2016the allowance for bad debt (recorded as wellan adjustment to rental revenues) as increased occupancy at Encore Apartments and Smith's Landing.

Rental revenues increased $18.2 million duringa result of the COVID-19 pandemic for the year ended December 31, 2016 compared to the year ended December 31, 2015. The decrease in office rental revenues resulted primarily from the dispositions of Richmond Tower2020. These decreases were partially offset by property acquisitions and Oyster Point, which we sold in the firstdevelopment deliveries completed during 2019 and third quarters of 2016, respectively.2020 as discussed above. The increase in retailmultifamily rental revenues resulted primarily from property acquisitions and new real estate placed into service. During the year ended December 31, 2016, we acquired the 11-property retail portfolio, Southgate Square, Southshore Shops, Columbus Village II,development deliveries completed during 2019 and Renaissance Square and placed into service Brooks Crossing and Lightfoot Marketplace. The increases in multifamily rental revenues resulted primarily from the delivery of Johns Hopkins Village in August 2016.2020, as well as increased occupancy at Greenside Apartments.

General Contracting and Real Estate Services Revenues. General contracting and real estate services revenues increased $35.0$111.3 million during the year ended December 31, 20172020 compared to the year ended December 31, 2016 as a result of several new large2019. The increase resulted primarily from the increase in revenues from Interlock Commercial, Solis Apartments at Interlock, and 27th Street Apartments & Garage projects, started subsequent to the first quarter of 2016. General contractingwhich were executed in 2019 and real estate services revenues decreased $12.2 million during the year ended December 31, 2016 compared to the year ended December 31, 2015 because of lowerexperienced increased volume on our construction contracts due to the completion of the Exelon construction project in 2016.  2020.

Rental Expenses. Rental expenses by segment for each of the three years ended December 31, 20172020 were as follows: follows (in thousands):
 Years Ended December 31, 20202019
 202020192018ChangeChange
Office$10,799 $8,722 $5,858 $2,077 $2,864 
Retail11,029 11,656 10,903 (627)753 
Multifamily17,132 13,954 10,461 3,178 3,493 
 $38,960 $34,332 $27,222 $4,628 $7,110 
 
 Years Ended December 31,  2017 2016
 2017 2016 2015 Change Change
 ($ in thousands)
Office$5,483
 $5,560
 $6,938
 $(77) $(1,378)
Retail10,233
 9,116
 5,915
 1,117
 3,201
Multifamily9,705
 7,228
 6,351
 2,477
 877
 $25,421
 $21,904
 $19,204
 $3,517
 $2,700
Rental expenses increased $3.5$4.6 million during the year ended December 31, 20172020 compared to the year ended December 31, 2016.2019. Office rental expenses increased primarily as a result of property acquisitions and development deliveries completed during 2019 and 2020 as discussed above. Retail rental expenses decreased primarily due toas a result of the disposition of four office propertiesthe seven-property retail portfolio in 2016May 2020 and 2017. Retailof Lightfoot Marketplace in August 2019, as well as decreases in non-essential repairs and maintenance and contracted services expenses in response to the COVID-19 pandemic. The decrease was partially offset by the commencement of operations at Market at Mill Creek in April 2019 and the acquisition of Red Mill Commons and Marketplace at Hilltop in May 2019. Multifamily rental expenses increased becauseprimarily as a result of property acquisitions and new real estate placed into service. Multifamily rental expenses increased because of the delivery of Johns Hopkins Village in August 2016development deliveries completed during 2019 and higher expenses for repairs and maintenance, property taxes, administration, and utilities at the other multifamily properties.2020.
    
Rental expenses increased $2.7 million during the year ended December 31, 2016 compared to the year ended December 31, 2015. Office rental expenses decreased primarily due to the disposition of Richmond Tower and Oyster Point. Retail rental expenses increased because of property acquisitions and new real estate placed into service. Multifamily rental expenses increased because of increased leasing at both Encore Apartments and Liberty Apartments and the delivery of Johns Hopkins Village in August 2016.
Real Estate Taxes. Real estate taxes by segment for the years ended December 31, 2017, 2016,2020, 2019, and 20152018 were as follows:follows (in thousands):
 Years Ended December 31, 20202019
 202020192018ChangeChange
Office$5,111 $3,471 $2,034 $1,640 $1,437 
Retail7,784 7,916 6,801 (132)1,115 
Multifamily5,241 3,574 2,548 1,667 1,026 
 $18,136 $14,961 $11,383 $3,175 $3,578 
 
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 Years Ended December 31,  2017 2016
 2017 2016 2015 Change Change
 ($ in thousands)
Office1,859
 2,000
 2,950
 $(141) $(950)
Retail6,176
 5,395
 2,928
 781
 2,467
Multifamily2,494
 2,234
 1,904
 260
 330
 $10,529
 $9,629
 $7,782
 $900
 $1,847
Real estate taxes increased $0.9$3.2 million during the year ended December 31, 20172020 compared to the year ended December 31, 2016.2019. Office real estate taxes increased primarily as a result of property acquisitions and development deliveries completed during 2019 and 2020 as discussed above. Retail real estate taxes decreased primarily becauseas a result of the disposition of four office propertiesthe seven-property retail portfolio in 2016May 2020 and 2017. Retail real estate taxes increased because of property acquisitions, new real estate placed into serviceLightfoot Marketplace in August 2019. The decrease was partially offset by the commencement of operations at Market at Mill Creek in April 2019 and reassessments,

particularlythe acquisition of Red Mill Commons and Marketplace at Wendover Village and North Hampton.Hilltop in May 2019. Multifamily real estate taxes increased because of the reassessment of Encore Apartments and The Cosmopolitan and the delivery of the retail portion Johns Hopkins Village in August 2016.
Real estate taxes increased $1.8 million during the year ended December 31, 2016 compared to the year ended December 31, 2015. Office real estate taxes decreased primarily because of the dispositions of Richmond Tower and Oyster Point. Retail real estate taxes increased becauseas a result of property acquisitions new real estate placed into service, and reassessments. Multifamily real estate taxes increased because of the reassessment of Encore Apartmentsdevelopment deliveries completed during 2019 and The Cosmopolitan and the delivery of Johns Hopkins Village in August 2016.2020.
  
General Contracting and Real Estate Services Expenses.General contracting and real estate services expenses for the year ended December 31, 20172020 increased $33.2$107.9 million compared to the year ended December 31, 2016 as a result of several new large2019. The increase resulted primarily from the increase in expenses from Interlock Commercial, Solis Apartments at Interlock, and 27th Street Apartments & Garage projects, which started subsequent to the first quarter of 2016. General contractingin 2019 and real estate services expense for the year ended December 31, 2016 decreased $12.0 million compared to the year ended December 31, 2015 because of lowerexperienced increased volume on our construction contracts, primarily due to the completion of the Exelon construction project in 2016. during 2020.
 
Depreciation and Amortization. Depreciation and amortization for the year ended December 31, 20172020 increased $2.0$5.4 million compared to the year ended December 31, 2016.2019. The increase was attributable to property acquisitions and new real estate placed into service anddevelopment deliveries. The increase was partially offset by dispositions in 20162020 and 2017. Depreciation and amortizationcertain assets that became fully depreciated.

Amortization of right-of-use assets - finance leases. Amortization of right-of-use assets - finance leases for the year ended December 31, 20162020 increased $12.2$0.2 million compared to the year ended December 31, 2015.2019. The increase was attributableprimarily due to property acquisitions and new real estate placed into service.the expense being recognized for the full period in 2020. There were no right-of-use-assets recorded by the Company prior to the second quarter of 2019.
 
General and Administrative Expenses. General and administrative expenses for the yearsyear ended December 31, 2017 and 20162020 increased $0.9$0.5 million and $1.2 million, respectively, compared to the respective prior years, because of higher regulatory and compliance costs, costs relating to information systems, as well asyear ended December 31, 2019. The increase resulted from higher compensation expense and benefit costs from increased employee headcount.cost driven by annual merit increases, which was partially offset by cost reduction measures as a part of our response to the COVID-19 pandemic.
 
Acquisition, Development and Other Pursuit Costs. During the yearyears ended December 31, 2017,2020 and 2019, we recognized $0.6 million and $0.8 million, respectively, of costs relating primarily to abandoned acquisitions. During the year ended December 31, 2016, we recognized $1.6 million ofpredevelopment costs primarily attributable to our acquisition of an 11-property retail portfolio,Southgate Square, and Southshore Shops. We adopted new accounting guidance on October 1, 2016 which allowed us to capitalize $0.7 million in costs related to the acquisitions of Renaissance Square and Columbus Village II. During the year ended December 31, 2015, we recognized $1.9 million of costs primarily attributable to our acquisition of Perry Hall Marketplace, Stone House Square, Socastee Commons, Columbus Village, Providence Plaza and an 11-property retail portfolio.for projects that are no longer probable.
 
Impairment Charges. Impairment charges during the years ended December 31, 2017 and 2016 were $0.1 million and $0.4 million, respectively, primarily related to tenants that vacated prior to their lease expiration. Impairment charges during the year ended December 31, 20152020 and 2019 were not material.$0.7 million and $0.3 million, respectively, primarily related to the tenants that vacated prior to their lease expirations.

    Gain on Real Estate Dispositions. During the year ended December 31, 2020, we recognized gains on real estate dispositions of $6.4 million, related to the sale of a portfolio of seven retail properties in May 2020 and the sale of Walgreens at Hanbury Village in August 2020. During the year ended December 31, 2019, we recognized gains on real estate dispositions of $4.7 million, related to the sale of Lightfoot Marketplace and a non-operating land parcel.
 
Interest Income. Interest income for the years ended December 31, 20172020 decreased $3.4 million compared to the year ended December 31 2019, primarily due to the two loans receivable placed on nonaccrual status effective April 1, 2020, which was partially offset by higher balances from increased loan funding on the Interlock Commercial and 2016 totaled $7.1 million and $3.2 million, respectively, and was attributable to our mezzanineSolis Apartment loans. As of December 31, 20172020 and 2016, we had funded $82.62019, our outstanding mezzanine loan balances were $128.6 million and $59.5$153.0 million, respectively, through our mezzanine loan program.respectively.
 
Interest Expense.expense on indebtedness. Interest expense for the year ended December 31, 2017 increased $1.02020 decreased $0.7 million compared to the year ended December 31, 20162019 primarily because of risingdue to lower balances under our revolving credit facility balance during 2020 and the overall decline in variable interest rates, which was partially offset by lower average debt balances. rates.

Interest expense on finance leases. Interest expense on finance leases for the year ended December 31, 20162020 increased $3.1$0.3 million compared to the year ended December 31, 2015 because2019. The increase was primarily due to expense being recognized for the full year in 2020. The Company did not have finance leases prior to the second quarter of increased borrowing under our credit facility and additional debt assumed2019.

Equity in connection with operating property acquisitions.  
Loss on Extinguishmentincome of Debt. Duringunconsolidated real estate entities. Equity in income of unconsolidated real estate entities for the year ended December 31, 2017,2019 relates to our investment in One City Center, which was an unconsolidated real estate investment until we recognized a $0.1 million loss on extinguishment of debt as a resultpurchased the retail and office portion of the modification and extension ofproperty from our credit facility which resulted in the departure of two syndicated lenders from the facility. During the year ended December 31, 2016, we recognized a $0.1 million losspartner on extinguishment of debt representing the unamortized debt issuance costs associated with our refinancing of the mortgages secured by 249 Central Park Retail, South Retail, Fountain Plaza, 4525 Main Street, and Encore Apartments. During the year ended December 31, 2015, we recognized a $0.5 million loss on extinguishment of debt representing the unamortized debt issuance costs associated with our refinancing of the mortgage secured by Smith’s Landing as well as our repayment of the Whetstone Apartments and Oceaneering construction loans.March 14, 2019. There were no operations relating to Harbor Point Parcel 3 during 2020.
    

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Gain on Real Estate Dispositions. During the year ended December 31, 2017, we recognized gains on real estate dispositions of $8.1 million, which includes a gain of $3.4 million on our sale of the Greentree Wawa outparcel, a gain of $4.2 million on our sale of the Commonwealth of Virginia-Chesapeake and Commonwealth of Virginia-Virginia Beach office buildings, and a gain of $0.5 million on our sale of the land outparcel at Sandbridge Commons. During the year ended December 31, 2016, we recognized gains on real estate dispositions of $30.5 million, which consisted of a $26.2 million gain on the sale of Richmond Tower, a $3.8 million gain on Oyster Point, and a $0.4 million gain on the Newport News Economic Development Authority building. During the year ended December 31, 2015, we recognized a $6.2 million gain on our sale of the Sentara Williamsburg medical office building, a $7.2 million gain on our sale of Whetstone Apartments, and a $5.0 million gain on our sale of the Oceaneering building.

Change in Fair Value of Interest Rate Derivatives. Derivatives and other. During the year ended December 31, 20172020, we recognized gainslosses on changes in fair value of interest rate derivatives of $1.1 million due to increasessignificant decreases in forward interest rate curves.LIBOR during 2020. During the year ended December 31, 2016,2019, we recognized losses on changes in fair value of interest rate derivatives of $0.9$3.6 million,, which was primarily due to the dedesignation of ourprojected decreases in interest rate swaps during the three months ended March 31, 2016. In 2016, allforward curves. The decrease in activity for both interest rate caps and swaps were reclassified out of other income to this line item. Losses recognized during the year ended December 31, 2015 were2020 is also due to a lower number of derivatives that have not material.been designated as hedges for accounting purposes.

Provision for unrealized credit losses. Provision for unrealized credit loss relates to increased expected loan losses due to changes in economic conditions and changes in the status of development projects that secure our mezzanine loans. The adoption of the new credit loss standard on January 1, 2020 generally has the effect of requiring us to recognize expected loan losses sooner than under the previous standard. During the year ended December 31, 2020, we recognized expected credit losses of $0.3 million.
 
Other Income.income (expense), net. Other income for the years ended December 31, 2017, 2016,2020 and 20152019 was relatively unchanged.materially consistent.
 
Income Taxes. Our TRS, through which we conduct our development and construction business, is subject to federal, state, and local corporate income taxes. The income tax benefit (provision) recognized during the years ended December 31, 2017, 2016,2020 and 20152019 is attributable to the (losses)taxable profits and losses of our TRS.  As a result of the Tax Reform Legislation,development and construction businesses that we remeasured deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The provisional amounts recorded related to the remeasurement of the deferred tax balance was approximately $0.2 million of tax expense.operate through our TRS.
 
Liquidity and Capital Resources
 
Overview
 
We believe our primary short-term liquidity requirements consist of general contractor expenses, operating expenses, and other expenditures associated with our properties, including tenant improvements, leasing commissions and leasing incentives, dividend payments to our stockholders required to maintain our REIT qualification, debt service, capital expenditures, new real estate development projects, mezzanine loan funding requirements, and strategic acquisitions. We expect to meet our short-term liquidity requirements through net cash provided by operations, reserves established from existing cash, borrowings under construction loans to fund new real estate development and construction, and borrowings available under our credit facility.facility, and net proceeds from the sale of common stock through our at-the-market continuous equity offering program (the "ATM Program"), which is discussed below.
 
Our long-term liquidity needs consist primarily of funds necessary for the repayment of debt at or prior to maturity, general contracting expenses, property development and acquisitions, tenant improvements, and capital improvements, and other investments.improvements. We expect to meet our long-term liquidity requirements with net cash from operations, long-term secured and unsecured indebtedness, and the issuance of equity and debt securities. We also may fund property development and acquisitions and capital improvements using our credit facility pending long-term financing.
 
As of December 31, 2017,2020, we had unrestricted cash and cash equivalents of $20.0$41.0 million available for both current liquidity needs as well as development activities. As of December 31, 2017,2020, we also had restricted cash in escrow of $3.0$9.4 million, some of which is available for capital expenditures at our operating properties. As of December 31, 2017,2020, we had $81.9$124.0 million available under our credit facility to meet our short-term liquidity requirements.requirements and $52.6 million available under construction loans to fund development activities.


Responses to COVID-19
On April 28, 2020, our board of directors reviewed the Company’s dividend policy and determined that it would be in the best interest of the Company, its stockholders, and its OP unitholders to temporarily suspend the payment of quarterly cash dividends to common stockholders and quarterly distributions to holders of Class A common units as a measure to preserve liquidity in light of the uncertainty resulting from COVID-19. Our board of directors did not suspend the payment of dividends on shares of our Series A Preferred Stock.

As a result of improvement in general economic conditions and our operating performance, our board of directors reinstated quarterly cash dividends on shares of our common stock and Class A common units with dividends of $0.11 per share and unit, for both the third and fourth quarters of 2020 and $0.15 per share and unit for the first quarter of 2021.

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Going forward we will continue to monitor our projected taxable income for 2021 and plan to distribute sufficient dividends to maintain our status as a REIT. We can provide no assurances that dividends and distributions paid per share of common stock and per Class A common unit, respectively, will return to an amount equal to the dividends and distributions paid for the quarter ended March 31, 2020.

In addition, in an effort to strengthen our financial flexibility and efficiently manage through the uncertainty caused by COVID-19, Lou Haddad, our President and Chief Executive Officer, voluntarily elected to reduce his base salary by 25%, and each of our directors, including Dan Hoffler and Russ Kirk, voluntarily elected to reduce their cash retainers and the value of their annual equity awards by 25%, in each case effective as of May 1, 2020. On February 18, 2021, as a result of improvement in general economic conditions and our operating performance, the Company’s board of directors reinstated the base salary of Lou Haddad, the Company’s President and Chief Executive Officer, and each of the Company’s directors to 100%, effective January 1, 2021.

    During 2020, we proactively deferred the commencement of the Chronicle Mill, Southern Post, and Ten Tryon development projects in order to provide additional balance sheet flexibility until stabilization of economic conditions. We anticipate commencing construction at Chronicle Mill during the first quarter of 2021 and commencing construction at Southern Post during the second half of 2021.
ATM Program

    On February 26, 2018, we commenced an at-the-market continuous equity offering program (the "Prior ATM Program"), which was amended on August 6, 2019, through which we could, from time to time, issue and sell shares of our common stock having an aggregate offering price of up to $180.7 million. During the three months ended March 31, 2020, we issued and sold 92,577 shares of common stock at a weighted average price of $18.23 per share under the Prior ATM Program, receiving net proceeds of $1.7 million after offering costs and commissions.

On March 10, 2020, we commenced a new at-the-market continuous equity offering program (the "ATM Program") through which we may, from time to time, issue and sell shares of our common stock and shares of our 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock (the "Series A Preferred Stock") having an aggregate offering price of up to $300.0 million, to or through our sales agents and, with respect to shares of our common stock, may enter into separate forward sales agreements to or through the forward purchaser. Upon commencing the ATM Program, we simultaneously terminated the Prior ATM Program.

During the year ended December 31, 2020, we issued and sold 1,783,768 shares of common stock at a weighted average price of $10.48 per share under the ATM Program, receiving net proceeds, after offering costs and commissions, of $18.4 million. During the year ended December 31, 2020, we issued and sold 713,418 shares of the Series A Preferred Stock at a weighted average price of $22.88 per share (inclusive of accrued dividends) under the ATM Program, receiving net proceeds, after offering costs and commissions, of $16.1 million.

    As of December 31, 2020, we had $265.0 million in availability under the ATM Program.

Series A Preferred Stock Offering

    On August 20, 2020, we sold 3,600,000 shares of our Series A Preferred Stock at a public offering price of $24.75 per share (inclusive of accrued dividends), for net proceeds, after the underwriting discount and offering expenses payable by the Company, of approximately $86.1 million, pursuant to a prospectus supplement, dated August 13, 2020, and a base prospectus dated March 9, 2020. We used the net proceeds to repay a portion of the outstanding borrowings under our unsecured revolving credit facility and for general corporate purposes.

Credit Facility

On October 26, 2017, we entered into an    We have a senior credit facility that was amended and restated credit agreement (the “amended credit agreement”),on October 3, 2019, which provides for a $300.0$355.0 million credit facility comprised of a $150.0 million senior unsecured revolving credit facility (the “revolving"revolving credit facility”facility") and a $150.0$205.0 million senior unsecured term loan facility (the “term"term loan facility”facility" and, together with the revolving credit facility, the “credit facility”"credit facility"), with a syndicate of banks. The amended credit facility replaced our prior $150.0 million revolving credit facility, which was scheduled to mature on February 20, 2019, and our prior $125.0 million term loan facility, which was scheduled to mature on February 20, 2021. We intend to use future borrowings under the credit facility for general corporate purposes, including funding acquisitions, andmezzanine lending, development and redevelopment of properties in our portfolio, and for working capital. In September and October of 2020, we paid off the Hanbury Village and Sandbridge Commons loans in full, resulting in the addition of those properties to the unencumbered borrowing base for the revolving

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credit facility. Our unencumbered borrowing pool supports revolving borrowings of up to $134.0 million as of December 31, 2020.

The credit facility includes an accordion feature that allows the total commitments to be increased to $450.0$700.0 million, subject to certain conditions, including obtaining commitments from any one or more lenders. The revolving credit facility has a scheduled maturity date of October 26, 2021,January 24, 2024, with two six-month extension options, subject to certain conditions, including payment of a 0.075% extension fee at each extension. The term loan facility has a scheduled maturity date of October 26, 2022.January 24, 2025.


The revolving credit facility bears interest at LIBOR (the London Inter-Bank Offered Rate) plus a margin ranging from 1.40%1.30% to 2.00%1.85%, and the term loan facility bears interest at LIBOR plus a margin ranging from 1.35%1.25% to 1.95%1.80%, in each case depending on our total leverage. We are also obligated to pay an unused commitment fee of 15 or 25 basis points on the unused portions of the commitments under the revolving credit facility, depending on the amount of borrowings under the credit facility. As of December 31, 2020, the interest rates on the revolving credit facility and the term loan facility were 1.64% and 1.59%, respectively. If we attain investment grade credit ratings from S&P and Moody’s, we may elect to have borrowings become subject to interest rates based on oursuch credit ratings.


The Operating Partnership is the borrower under the credit facility, and its obligations under the credit facility are guaranteed by us and certain of its subsidiaries that are not otherwise prohibited from providing such guaranty.


The credit agreement contains customary representations and warranties and financial and other affirmative and negative covenants. Our ability to borrow under the credit facility is subject to our ongoing compliance with a number of financial covenants, affirmative covenants and other restrictions, including the following:


•Total leverage ratio of not more than 60% (or 65% for the two consecutive quarters following any acquisition that is equalwith a purchase price of at least up to or greater than 10% of our total asset value (as defined in the credit agreement),$100.0 million, but only up to two times during the term of the credit facility);
•Ratio of adjusted EBITDA (as defined in the credit agreement) to fixed charges of not less than 1.50 to 1.0;
•Tangible net worth of not less than the sum of 75% of tangible net worth (as defined in the credit agreement) as of September 30, 2017$567,106,000 and amount equal to 75% of the net equity proceeds received after June 30, 2017;2019;
•Ratio of secured indebtedness to total asset value of not more than 40%;
•Ratio of secured recourse debt to total asset value of not more than 20%;
•Total unsecured leverage ratio of not more than 60% (or 65% for the two consecutive quarters following any acquisition that is equalwith a purchase price of at least up to or greater than 10% of our total asset value,$100.0 million, but only up to two times during the term of the credit facility);
•Unencumbered interest coverage ratio (as defined in the credit agreement) of not less than 1.75 to 1.0;
Ratio of unencumbered NOI (as defined in the credit agreement) to all unsecured debt of not less than 12%;
•Maintenance of a minimum of at least 15 unencumbered properties (as defined in the credit agreement) with an unencumbered asset value (as defined in the credit agreement) of not less than $300.0 million at any time; and
•Minimum occupancy rate (as defined in the credit agreement) for all unencumbered properties of not less than 80% at any time.time; and

•Maximum aggregate rental revenue from any single tenant of not more than 30% of rental revenues with respect to all leases of unencumbered properties (as defined in the credit agreement).

The credit facilityagreement limits our ability to pay cash dividends. However, so long as no default or event of default exists, the credit agreement allows us to pay cash dividends with respect to any 12-month period in an amount not to exceed the greater of: (i) 95% of adjusted funds from operations (as defined in the credit agreement) or (ii) the amount required for us (a) to maintain our status as a REIT and (b) to avoid income or excise tax under the Code. If certain defaults or events of default exist, we may pay cash dividends with respect to any 12-month period to the extent necessary to maintain our status as a REIT. The credit facilityagreement also restricts the amount of capital that we can invest in specific categories of assets, such as unimproved land holdings, development properties, notes receivable, mortgages, mezzanine loans, and unconsolidated affiliates, and restricts the amount of stock and OP units that we may repurchase during the term of the credit facility.


We may, at any time, voluntarily prepay any loan under the credit facility in whole or in part without premium or penalty.penalty, except for those portions subject to an interest rate swap agreement.


The credit agreement includes customary events of default, in certain cases subject to customary periods to cure. The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among other things, declare the unpaid principal, accrued and unpaid interest, and all other amounts payable under the credit facility to be immediately due and payable.
 
We are currently in compliance with all covenants under the credit facility.agreement.

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Consolidated Indebtedness
 
The following table sets forth our consolidated indebtedness as of December 31, 20172020 ($ in thousands):
Secured DebtAmount Outstanding
Interest Rate (a)
Effective Rate for Variable-Rate Debt    Maturity DateBalance at Maturity
Southgate Square$19,682 LIBOR + 1.60%1.74 % April 29, 2021$19,462 
Nexton Square(b)
22,909 LIBOR + 2.25%2.50 %August 8, 202122,909 
Encore Apartments(b)(c)
24,337 3.25 % September 10, 202123,992 
4525 Main Street(b)(c)
31,231 3.25 % September 10, 202130,788 
Red Mill West10,851 4.23 % June 1, 202210,187 
Thames Street Wharf70,000 LIBOR + 1.30%1.81 %(e)June 26, 202270,000 
Marketplace at Hilltop10,120 4.42 % October 1, 20229,383 
1405 Point53,000 LIBOR + 2.25%2.39 % January 1, 202351,532 
Socastee Commons4,458 4.57 % January 6, 20234,223 
Wills Wharf59,044 LIBOR + 2.25%2.39 % June 26, 202359,044 
249 Central Park Retail(d)
16,597 LIBOR + 1.60%3.85 %(e)August 10, 202315,935 
Fountain Plaza Retail(d)
9,988 LIBOR + 1.60%3.85 %(e)August 10, 20239,590 
South Retail(d)
7,287 LIBOR + 1.60%3.85 %(e)August 10, 20236,996 
Hoffler Place(f)
18,400 LIBOR + 2.60%3.00 %January 1, 202418,143 
Summit Place(f)
23,100 LIBOR + 2.60%3.00 %January 1, 202422,789 
One City Center24,712 LIBOR + 1.85%1.99 % April 1, 202422,559 
Red Mill Central2,363 4.80 % June 17, 20241,765 
Solis Gainesville— LIBOR + 3.00%3.75 %August 31, 2024— 
Premier Apartments(g)
16,716 LIBOR + 1.55%1.69 % October 31, 202415,849 
Premier Retail(g)
8,241 LIBOR + 1.55%1.69 % October 31, 20247,813 
Red Mill South5,833 3.57 % May 1, 20254,383 
Brooks Crossing Office15,393 LIBOR + 1.60%1.74 % July 1, 202511,537 
Market at Mill Creek13,789 LIBOR + 1.55%1.69 % July 12, 202510,876 
Johns Hopkins Village50,859 LIBOR + 1.25%4.19 %(e)August 7, 202545,967 
North Point Center Note 22,094 7.25 % September 15, 20251,344 
Lexington Square14,440 4.50 % September 1, 202812,044 
Red Mill North4,294 4.73 % December 31, 20283,295 
Greenside Apartments33,310 3.17 % December 15, 202926,090 
The Residences at Annapolis Junction84,375 SOFR + 2.66%2.75 %November 1, 203071,183 
Smith's Landing17,331 4.05 % June 1, 2035384 
Liberty Apartments13,877 5.66 % November 1, 2043— 
Edison Apartments16,272 5.30 %December 1, 2044100 
The Cosmopolitan42,909 3.35 % July 1, 2051— 
Total secured debt$747,812 $610,162 
Unsecured Debt
Senior unsecured revolving credit facility10,000 LIBOR+1.30%-1.85%1.64 % January 24, 202410,000 
Senior unsecured term loan19,500 LIBOR+1.25%-1.80%1.59 % January 24, 202519,500 
Senior unsecured term loan185,500 LIBOR+1.25%-1.80%1.95%-4.47%(e)January 24, 2025185,500 
Total unsecured debt$215,000 $215,000 
Total principal balances$962,812 $825,162 
Unamortized GAAP adjustments(8,971)
Other note payable(h)
10,004 
Indebtedness, net$963,845 

(a) LIBOR and SOFR rates are determined by individual lenders.
(b) Refinanced subsequent to year end.
(c) Cross collateralized.
(d) Cross collateralized.
(e) Includes debt subject to interest rate swap agreements.
(f) Cross collateralized.
(g) Cross collateralized.
(h) Represents the fair value of additional ground lease payments at 1405 Point over the approximately 42-year remaining lease term and an earn-out liability for the Gainesville development project.
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      Effective Rate for    
  Amount Interest Variable-Rate   Balance at
Secured Debt Outstanding Rate(a) Debt    Maturity Date Maturity
Sandbridge Commons $8,468
 LIBOR + 1.75%
 3.31% January 17, 2018(b)$8,468
Columbus Village Note 1 6,080
 LIBOR + 2.00%
 3.56%(c)  April 5, 2018 6,033
Columbus Village Note 2 2,218
 LIBOR + 2.00%
 3.56% April 5, 2018 2,207
Johns Hopkins Village 46,698
 LIBOR + 1.90%
 3.46% July 30, 2018 46,698
Lightfoot Marketplace 10,500
 LIBOR + 1.75%
 3.31% November 14, 2018 10,500
North Point Note 1 9,571
 6.45% 

 February 5, 2019 9,333
Harding Place 3,874
 LIBOR + 2.95%
 4.51% February 24, 2020 3,874
Town Center Phase VI 1,505
 LIBOR + 3.50%
 5.06% June 29, 2020 1,505
Southgate Square 20,708
 LIBOR + 2.00%
 3.56% April 29, 2021 18,925
249 Central Park Retail 16,851
 LIBOR + 1.95%
 3.51% August 8, 2021 15,959
Fountain Plaza Retail 10,145
 LIBOR + 1.95%
 3.51% August 8, 2021 9,608
South Retail 7,394
 LIBOR + 1.95%
 3.51% August 8, 2021 7,002
4525 Main Street 32,034
 3.25% 

 September 10, 2021 30,774
Encore Apartments 24,966
 3.25% 

 September 10, 2021 24,006
Hanbury Village 19,503
 3.78% 

 August 15, 2022 17,109
Socastee Commons 4,771
 4.57% 

 January 6, 2023 4,223
North Point Note 2 2,459
 7.25% 

 September 15, 2025 1,344
Smith's Landing 19,764
 4.05% 

 June 1, 2035 —
Liberty Apartments 14,694
 5.66% 

 November 1, 2043 —
The Cosmopolitan 45,209
 3.35%  
 July 1, 2051 —
Total secured debt��$307,412
  
  
   $217,568
Unsecured Debt  
  
  
    
Revolving credit facility 66,000
 LIBOR+1.40%-2.00%
 3.11%
October 26, 2021 66,000
Term loan 50,000
 LIBOR+1.35%-1.95%
 3.50%(c)  October 26, 2022 50,000
Term loan 100,000
 LIBOR+1.35%-1.95%
 3.06%
October 26, 2022 100,000
           
Total unsecured debt $216,000
  
  
   $216,000
Unamortized GAAP adjustments (6,140)  
  
   —
Indebtedness, net $517,272
  
  
   $433,568

(a)LIBOR is determined by individual lenders.
(b)Subsequent to December 31, 2017, the Sandbridge Commons mortgage was extended for an additional five years.
(c)Subject to an interest rate swap agreement.

In April 2020, we proactively obtained a waiver from the lender for the Premier Retail/Apartments property wherein we did not have to meet the minimum debt service coverage requirement for the period ended June 30, 2020. We also proactively obtained a waiver from the lender for the 249 Central Park, Fountain Plaza Retail, and South Retail properties wherein we did not have to meet the minimum debt service coverage requirement for the periods ended June 30, 2020 and December 31, 2020. We are currently are in compliance with all covenants on our outstanding indebtedness.indebtedness after giving effect to the waivers granted.



As of December 31, 2017,2020, our outstanding indebtedness maturesscheduled principal repayments and maturities during each of the followingnext five years and thereafter were as follows ($ in thousands):
Year (1)
Amount DuePercentage of Total 
2021(2)
$107,833 11 %
202299,237 10 %
2023156,380 16 %
2024108,264 11 %
2025286,646 30 %
Thereafter204,452 22 %
Total$962,812 100 %

(1) Does not reflect the exercise of any maturity extension options.
    Percentage of
Year 
Amount Due 
 
Total 
2018 $77,683
 15%
2019 13,284
 3%
2020 10,338
 2%
2021 176,347
 34%
2022 169,808
 32%
Thereafter 75,952
 14%
  $523,412
 100%
(2) The amount due includes $78.5 million of debt that was refinanced in January 2021.
 
Interest Rate Derivatives
On February 20, 2015, we entered into a $50.0 million floating-to-fixed interest rate swap attributable to one-month LIBOR indexed interest payments. The $50.0 million interest rate swap has a fixed rate of 2.00%, an effective date of March 1, 2016 and a maturity date of February 20, 2020. We entered into this interest rate swap agreement in connection with the senior unsecured term loan facility with an original balance of $50.0 million that bears interest at LIBOR plus 1.35% to 1.95%, depending on our total leverage.

On July 13, 2015, we entered into a $6.5 million floating-to-fixed interest rate swap attributable to one-month LIBOR indexed interest payments. The $6.5 million interest rate swap has a fixed rate of 3.05%, an effective date of July 13, 2015 and a maturity date of April 5, 2018.
On February 25, 2016, we entered into a LIBOR interest rate cap agreement on a notional amount of $75.0 million at a strike rate of 1.50% for a premium of less than $0.1 million. The interest rate cap agreement expires on March 1, 2018.

On June 17, 2016, we entered into a LIBOR interest rate cap agreement on a notional amount of $70.0 million at a strike rate of 1.00% for a premium of less than $0.1 million. The interest rate cap agreement expires on June 17, 2018.
On February 7, 2017, we entered into a LIBOR interest rate cap agreement on a notional amount of $50.0 million at a strike rate of 1.50% for a premium of $0.2 million. The interest rate cap expires on March 1, 2019.

On June 23, 2017, we entered into a LIBOR interest rate cap agreement on a notional amount of $50.0 million at a strike rate of 1.50% for a premium of less than $0.2 million. The interest rate cap agreement expires on July 1, 2019.
On September 18, 2017, we entered into a LIBOR interest rate cap agreement on a notional amount of $50.0 million at a strike rate of 1.50 % for a premium of less than $0.2 million. The interest rate cap agreement expires on October 1, 2019.

On November 28, 2017, we entered into a LIBOR interest rate cap agreement on a notional amount of $50.0 million at a strike rate of 1.50% for a premium of less than $0.4 million. The interest rate cap agreement expires on December 1, 2019.


As of December 31, 2017,2020, we were party to the following LIBOR and SOFR interest rate cap agreements ($ in thousands):  
Effective Date Maturity Date Strike Rate Notional Amount
February 25, 2016 March 1, 2018 1.50% $75,000
June 17, 2016 June 17, 2018 1.00% 70,000
February 7, 2017 March 1, 2019 1.50% 50,000
June 23, 2017 July 1, 2019 1.50% 50,000
September 18, 2017 October 1, 2019 1.50% 50,000
November 28, 2017 December 1, 2019 1.50% 50,000
Total     $345,000
Effective DateMaturity Date LIBOR Strike RateSOFR Strike RateNotional Amount
12/11/20181/1/20212.75 %N/A$50,000 
5/15/20196/1/20222.50 %N/A100,000 
1/10/20202/1/20221.75 %N/A50,000 
1/28/20202/1/20221.75 %N/A50,000 
3/2/20203/1/20221.50 %N/A100,000 
7/1/20207/1/20230.50 %N/A100,000 
11/1/202011/1/2023N/A1.84 %84,375 
Total  $534,375 
 

As of December 31, 2020, the Company held the following floating-to-fixed interest rate swaps ($ in thousands):
Related DebtNotional AmountIndexSwap Fixed RateDebt effective rateEffective DateExpiration Date
Senior unsecured term loan$50,000 1-month LIBOR2.78 %4.23 %5/1/20185/1/2023
John Hopkins Village50,859 1-month LIBOR2.94 %4.19 %8/7/20188/7/2025
Senior unsecured term loan10,500 1-month LIBOR3.02 %4.47 %10/12/201810/12/2023
249 Central Park Retail, South Retail, and Fountain Plaza Retail33,872 1-month LIBOR2.25 %3.85 %4/1/20198/10/2023
Senior unsecured term loan50,000 1-month LIBOR2.26 %3.71 %4/1/201910/26/2022
Thames Street Wharf70,000 1-month LIBOR0.51 %1.81 %3/26/20206/26/2024
Senior unsecured term loan25,000 1-month LIBOR0.50 %1.95 %4/1/20204/1/2024
Senior unsecured term loan25,000 1-month LIBOR0.50 %1.95 %4/1/20204/1/2024
Senior unsecured term loan25,000 1-month LIBOR0.55 %2.00 %4/1/20204/1/2024
Total$340,231 

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Contractual Obligations
 
The following table summarizes the future payments for known contractual obligations as of December 31, 20172020 (in thousands):
 
    Payments due by period
    Less than 1 – 3 3 – 5 More than
Contractual Obligations Total 1 year years years 5 years
Principal payments of long-term indebtedness (1)
 $523,412
 $77,683
 $23,622
 $346,155
 $75,952
Ground and other operating leases 100,019
 2,260
 4,249
 3,954
 89,556
Long-term debt—fixed interest 73,017
 8,545
 15,510
 12,073
 36,889
Long-term debt—variable interest(2) (3)
 32,185
 8,891
 14,920
 8,374
 —
Tenant-related and other commitments 17,011
 16,896
 —
 —
 115
Total(4)
 $745,644
 $114,275
 $58,301
 $370,556
 $202,512
  Payments due by period
  Less than1 – 33 – 5More than
Contractual ObligationsTotal1 yearyearsyears5 years
Principal payments and maturities of long-term indebtedness$962,812 $107,833 $255,617 $394,910 $204,452 
Ground and other operating leases159,386 3,022 6,502 6,701 143,161 
Interest payments on long-term debt—fixed interest114,495 19,280 31,456 20,932 42,827 
Interest payments on long-term debt—variable interest(1)(2)
39,866 8,733 14,464 6,264 10,405 
Tenant-related and other commitments5,579 4,533 446 600 — 
Total (3) (4)
$1,282,138 $143,401 $308,485 $429,407 $400,845 

(1)Does not reflect the extension of the Sandbridge Commons mortgage in January 2018 or $58.0 million in additional borrowings on the revolving line of credit in January 2018.
(2)For long-term debt that bears interest at variable rates, we estimated future interest payments using the indexed rates as of December 31, 2017. LIBOR as of December 31, 2017 was 156 basis points.
(3)Assumes the balance outstanding of $66.0 million and the weighted average interest rate of 3.11% in effect at December 31, 2017 remain in effect until maturity of our secured revolving credit facility. Amounts also include unused credit facility fees assuming the balance outstanding at December 31, 2017 remains outstanding through maturity of our secured revolving credit facility.
(4)Contractual obligations above do not include funding obligations to non-wholly owned development projects as well as unfunded mezzanine loan commitments due to the uncertainty of the timing and amounts of certain of these obligations. Refer to "Item 1. Business" for information about our development projects and mezzanine loans.

(1)For long-term debt that bears interest at variable rates, we estimated future interest payments using the indexed rates as of December 31, 2020. LIBOR as of December 31, 2020 was 14 basis points. SOFR as of December 31, 2020 was 7 basis points.
(2)Assumes the balance outstanding of $10.0 million and the weighted average interest rate of 1.64% in effect at December 31, 2020 remain in effect until maturity of our secured revolving credit facility. Amounts also include unused credit facility fees assuming the balance outstanding at December 31, 2020 remains outstanding through maturity of our secured revolving credit facility.
(3)Contractual obligations above do not include funding obligations to non-wholly owned development projects as well as unfunded mezzanine loan commitments due to the uncertainty of the timing and amounts of certain of these obligations. Refer to "Item 1. Business" for information about our development projects and mezzanine loans.
(4)Contractual Obligations above exclude increased ground lease payments at 1405 Point and accrued earn-out payments to our joint venture partner at Gainesville, each of which is classified as notes payable in the consolidated balance sheets.

Off-Balance Sheet Arrangements
 
We    In connection with our mezzanine lending activities, we have entered into a standby lettermade guarantees to pay portions of credit for $2.1 millioncertain senior loans of third parties associated with the development projects. The following table summarizes the guarantees made by us as a guarantee of the senior construction loan on the Point Street Apartments construction project.. Letters of credit generally are available for draw down in the event we do not perform.December 31, 2020 (in thousands):
Payment guarantee amount
Delray Plaza$5,180 
Interlock Commercial34,300 
Total$39,480 

Cash Flows
 Years Ended 
 December 31,  
 20202019Change
 ($ in thousands)
Operating Activities$91,179 $67,729 $23,450 
Investing Activities(26,227)(295,063)268,836 
Financing Activities(58,101)246,862 (304,963)
Net Increase$6,851 $19,528 $(12,677)
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period$43,579 $24,051  
Cash, Cash Equivalents, and Restricted Cash, End of Period$50,430 $43,579  
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Years Ended   Years Ended 
December 31,    December 31,  
2017 2016 Change 20192018Change
($ in thousands) ($ in thousands)
Operating Activities$58,018
 $59,989
 $(1,971)Operating Activities$67,729 $56,087 $11,642 
Investing Activities(102,426) (226,253) 123,827
Investing Activities(295,063)(240,563)(54,500)
Financing Activities42,131
 161,644
 (119,513)Financing Activities246,862 185,611 61,251 
Net Increase (Decrease)$(2,277) $(4,620) $2,343
Net IncreaseNet Increase$19,528 $1,135 $18,393 
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period$25,193
 $29,813
  Cash, Cash Equivalents, and Restricted Cash, Beginning of Period$24,051 $22,916  
Cash, Cash Equivalents, and Restricted Cash, End of Period$22,916
 $25,193
  Cash, Cash Equivalents, and Restricted Cash, End of Period$43,579 $24,051  
 
Net cash provided by operating activities for the year ended December 31, 2017 decreased $2.02020 increased $23.5 million compared to the year ended December 31, 20162019 primarily as a result of significant payments made on construction accounts payable during 2017, which was partially offset bytiming differences in operating assets and liabilities, increased property net operating income.income from the property portfolio, and an increase in gross profit from general contracting and real estate services.


    
Net cash used for investing activities for the year ended December 31, 20172020 decreased $123.8$268.8 million compared to the year ended December 31, 20162019 primarily due to decreased acquisition and development activity. Cash outflowsactivity, increased disposition activity, and lower levels of mezzanine loan funding.
    Net cash used for acquisitions totaled $30.0 million forfinancing activities during the year ended December 31, 20172020 was $58.1 million compared to $195.6 million for the year ended December 31, 2016.
During the year ended December 31, 2017, we invested $45.7 million in new real estate development compared to $57.4net cash provided by financing activities of $246.9 million during the year ended December 31, 2016.
Net cash provided by financing activities for the year ended December 31, 2017 decreased $119.5 million compared to the year ended December 31, 20162019 primarily as a result of decreasedlower levels of net debtborrowings due to the partial paydown of the revolving credit facility and a decrease in common stock issuances, and borrowings, which was partially offset by increased common stock issuances.higher issuances of preferred stock.
 
 Years Ended  
 December 31,   
 2016 2015 Change
 ($ in thousands)
Operating Activities$59,989
 $33,266
 $26,723
Investing Activities(226,253) (57,961) (168,292)
Financing Activities161,644
 24,401
 137,243
Net Increase (Decrease)$(4,620) $(294) $(4,326)
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period$29,813
 $30,107
  
Cash, Cash Equivalents, and Restricted Cash, End of Period$25,193
 $29,813
  
Net cash provided by operating activities for the year ended December 31, 2016 increased $26.7 million compared to the year ended December 31, 2015 primarily as a result of more net cash generated from our operating property portfolio, complimented by higher net cash generated from our construction business.
Net cash used for investing activities for the year ended December 31, 2016 increased $168.3 million compared to the year ended December 31, 2015 primarily due to increased acquisition and development activity. Cash outflows for acquisitions totaled $195.6 million for the year ended December 31, 2016 compared to $68.4 million for the year ended December 31, 2015.
During the year ended December 31, 2016, we invested $57.4 million in new real estate development compared to $52.7 million during the year ended December 31, 2015.
Net cash provided by financing activities for the year ended December 31, 2016 increased $137.2 million compared to the year ended December 31, 2015 primarily as a result of increased net debt issuances and borrowings.

Non-GAAP Financial Measures
 
FFO and Normalized FFO


We calculate FFO in accordance with the standards established by NAREIT. NAREITthe National Association of Real Estate Investment Trusts ("Nareit"). Nareit defines FFO as net income (loss) (calculated in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, real estate related depreciation and amortization (excluding amortization of deferred financing costs), impairment of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures.
 
FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because it believeswe believe that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared year over year,year-over-year, captures trends in occupancy rates, rental rates, and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs.
 
However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our

results from operations, the utility of FFO as a measure of our performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the NAREITNareit definition as we do, and, accordingly, our calculation of FFO may not be comparable to such other REITs’ calculation of FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or service indebtedness. Also, FFO also should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.
 
We also believe that the computation of FFO in accordance with NAREIT’sNareit’s definition includes certain items that are not indicative of the results provided by the Company’sour operating property portfolio and affect the comparability of the Company’sour year-over-year performance. Accordingly, management believes that Normalized FFO is a more useful performance measure that excludes certain items, including but not limited to, debt extinguishment losses and prepayment penalties, impairment of intangible assets
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and liabilities, property acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives and other instruments, provision for unrealized credit losses, amortization of right-of-use assets attributable to finance leases, severance related costs, and other non-comparable items.  
 
The following table sets forth a reconciliation of FFO and Normalized FFO for each of the three years ended December 31, 20172020, 2019 and 2018 to net income, the most directly comparable GAAP measure:  
 
 Years Ended December 31, 
 202020192018
 (in thousands, except per share and unit amounts)
Net income attributable to common stockholders and OP Unit holders$29,840 $29,590 $23,492 
Depreciation and amortization (1)
59,545 53,616 40,178 
Gain on operating real estate dispositions (2)
(6,388)(3,220)(833)
Impairment of real estate assets— — 1,502 
FFO attributable to common stockholders and OP Unit holders82,997 79,986 64,339 
Acquisition, development and other pursuit costs584 844 352 
Impairment of intangible assets and liabilities666 252 117 
Loss on extinguishment of debt— 30 11 
Provision for unrealized credit losses256 — — 
Amortization of right-of-use assets - finance leases586 377 — 
Change in fair value of derivatives and other1,130 3,599 951 
Severance related costs— — 688 
Normalized FFO available to common stockholders and OP Unit holders$86,219 $85,088 $66,458 
Net income attributable to common stockholders and OP Unit holders per diluted share and unit$0.38 $0.41 $0.36 
FFO attributable to common stockholders and OP Unit holders per diluted share and unit$1.06 $1.10 $0.99 
Normalized FFO attributable to common stockholders and OP Unit holders per diluted share and unit$1.10 $1.17 $1.03 
Weighted-average common shares and units - diluted78,309 72,644 64,754 

(1) The adjustment for depreciation and amortization for the years ended December 31, 2020 and 2019 exclude $0.4 million and $1.2 million, respectively, of depreciation attributable to the Company's joint venture partners. Additionally, the adjustment for depreciation and amortization for the years ended December 31, 2019, and 2018 includes $0.2 million and $0.3 million, respectively, of depreciation attributable to the Company's investment in One City Center, which was an unconsolidated real estate investment until March 14, 2019.
(2) The adjustment for gain on operating real estate dispositions for the year ended December 31, 2019 excludes the portion of the gain on Lightfoot Marketplace that was allocated to our joint venture partner and excludes the gain on sale of a non-operating land parcel. The adjustment for gain on operating real estate dispositions for the year ended December 31, 2018 excludes the gain on the River City industrial facility because this property was sold before being placed into service.
 Years Ended December 31, 
 2017 2016 2015
 ($ in thousands)
Net income$29,925
 $42,755
 $31,183
Depreciation and amortization37,321
 35,328
 23,153
Gain on operating real estate dispositions(7,595) (30,103) (18,394)
Funds from operations$59,651
 $47,980
 $35,942
Acquisition, development and other pursuit costs648
 1,563
 1,935
Impairment charges110
 355
 41
Loss on extinguishment of debt50
 82
 512
Change in fair value of interest rate derivatives(1,127) 941
 229
Normalized funds from operations$59,332
 $50,921
 $38,659

The adjustment for gain on operating real estate dispositions for the year ended December 31, 2017 excludes the gain on the land outparcel at Sandbridge Commons because this was a non-operating parcel. Additionally, the adjustment for gain on real estate dispositions for the year ended December 31, 2016 excludes the gain on the Newport News Economic Authority building because this building was sold before being placed in service.


Inflation
 
Substantially all of our office and retail leases provide for the recovery of increases in real estate taxes and operating expenses. In addition, substantially all of the leases provide for annual rent increases. We believe that inflationary increases may be offset in part by the contractual rent increases and expense escalations previously described. In addition, our multifamily leases generally have lease terms ranging from 7 to 15 months with a majority having 12-month lease terms allowing negotiation of rental rates at term end, which we believe reduces our exposure to the effects of inflation.


Item 7A.Quantitative and Qualitative Disclosures About Market Risk.
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.
 
The primary market risk to which we are exposed is interest rate risk. Our primary interest rate exposure is daily LIBOR. We primarily use fixed interest rate financing to manage our exposure to fluctuations in interest rates. We also use

derivative financial instruments to manage interest rate risk. We do not use these derivatives for trading or other speculative purposes.
 
As of December 31, 20172020 and excluding unamortized GAAP adjustments, approximately $229.1$574.0 million, or 43.8%59.6%, of our debt had fixed interest rates or was subject to interest rate swaps and approximately $294.4$388.9 million, or 56.2%40.4%, had variable interest rates. Considering interest rate swaps and caps, 100%100.0% of our debt is either fixed-rate or economically hedged. As of December 31, 2017,2020, LIBOR was approximately 15614 basis points and SOFR was approximately 7 basis points. Assuming no
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change in the level of our variable-rate debt or derivative instruments, if interest rates were to increase by 100 basis points, our cash flow would increasedecrease by approximately $0.5$3.2 million per year due to our interest rate derivatives.year. Assuming no change in the level of our variable-rate debt or derivative instruments, if LIBORinterest rates were reduced to 560 basis points, our cash flow would increase by approximately $2.4$0.5 million per year.


Item 8.Financial Statements and Supplementary Data.
Item 8.    Financial Statements and Supplementary Data.
 
Our consolidated financial statements and supplementary data are included as a separate section of this Annual Report on Form 10-K commencing on page F-1 and are incorporated herein by reference.


Item 9.Changes and Disagreements with Accountants on Accounting and Financial Disclosure.
Item 9.    Changes and Disagreements with Accountants on Accounting and Financial Disclosure.
 
None.
 
Item 9A.    Controls and Procedures.  
 
Disclosure Controls and Procedures
 
The Company’s management has evaluated, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the    We maintain disclosure controls and procedures (as such term is defined in RulesRule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”"Exchange Act")), as required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2017, the Company’s disclosure controls and procedures were effectiveare designed to ensure that information we are required to disclosebe disclosed in our reports filed or submitted withunder the Securities and Exchange Commission (i)Act is processed, recorded, processed, summarized, and reported within the time periods specified in the Securitiesrules and regulations of the SEC and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.    

    We have carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our disclosure controls and procedures as of December 31, 2020, the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer have concluded, as of December 31, 2020, that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports filed or submitted under the Exchange Commission’sAct (i) is processed, recorded, summarized, and reported within the time periods specified in the SEC's rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.
 
Management’s Annual Report on Internal Control over Financial Reporting
 
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 20172020 based on the 2013 framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)(2013 framework). Based on that evaluation, the Company’s management concluded that our internal control over financial reporting was effective as of December 31, 2017.2020.  
 
Attestation Report    Our internal control over financial reporting as of Independent Registered Public Accounting FirmDecember 31, 2020 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included elsewhere herein.

Not applicable.

Changes in Internal Control over Financial Reporting
 
There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 20172020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.



Item 9B.    Other Information.  
Item 9B.Other Information.  
 
Appointment    None.
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Table of Chief Operating OfficerContents

On February 22, 2018, our board of directors appointed Eric L. Smith, our current Chief Investment Officer and Corporate Secretary, to serve as our Chief Operating Officer effectively immediately. Mr. Smith will continue to serve as our Chief Investment Officer and Corporate Secretary. Mr. Smith has served as our Chief Investment Officer since July 2015 and as our Corporate Secretary since our initial public offering. Mr. Smith previously served as our Vice President of Operations from our initial public offering until he was named Chief Investment Officer in July 2015. For additional information regarding Mr. Smith’s background and experience, see “Executive Officers-Eric L. Smith” in our Definitive Proxy Statement on Schedule 14A filed with the SEC on April 25, 2017 (the “Proxy Statement”).

Effective upon Mr. Smith’s appointment as our Chief Operating Officer, the compensation committee of our board of directors approved the designation of Mr. Smith as a Tier II participant under the Executive Severance Benefit Plan (the “Severance Plan”) of our Operating Partnership, which was filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed with the SEC on November 12, 2013. For a description of the Severance Plan, see “Compensation of Executive Officers-Severance Benefits” in the Proxy Statement. Other than Mr. Smith’s designation as a Tier II participant under the Severance Plan, we did not enter into any new compensation arrangements with Mr. Smith in connection with his appointment as our Chief Operating Officer. There is no family relationship between Mr. Smith and any of our directors or executive officers, and there are no related-party transactions in which Mr. Smith or any of his immediate members has an interest that would require disclosure under Item 404(a) of Regulation S-K, other than as disclosed under “Certain Relationships and Related Party Transactions” in the Proxy Statement.

Adoption of Amended and Restated Bylaws

On February 22, 2018, our board of directors approved Amended and Restated Bylaws (the “Bylaws”) to (i) provide for majority voting in uncontested elections of directors and (ii) permit stockholders to amend the Bylaws, subject to certain conditions, in each case as further described below.

The amended Section 7 of Article II of the Bylaws provides that, in uncontested elections of directors, director nominees will be elected by the vote of a majority of the votes cast with respect to the director, which means that the number of votes cast for a director must exceed the number of votes cast against such director. For contested elections of directors, in which the number of director nominees exceeds the number of directors to be elected, directors will be elected by a plurality of the votes cast. Prior to the adoption of the Bylaws, directors were elected by a plurality of the votes cast, whether or not the election was contested. In connection with the adoption of the Bylaws, our board of directors also approved an amendment to our Corporate Governance Guidelines to include a director resignation policy, as described below under “Amended Corporate Governance Guidelines.”

The amended Article XIV of the Bylaws now permit stockholders to amend the Bylaws by the affirmative vote of the holders of a majority of outstanding shares of our common stock pursuant to a binding proposal submitted to the stockholders for approval at a duly called annual meeting or special meeting of stockholders by a stockholder, or group of no more than six stockholders, owning at least 1% or more of the outstanding shares of our common stock continuously for at least one year. A stockholder proposal submitted under the amended Article XIV of the Bylaws may not alter or repeal (i) Article XII of the Bylaws, which provides for indemnification of our directors and officers, or (ii) Article XIV of the Restated Bylaws, which addresses procedures for amendment of the Bylaws, in each case, without the approval of our board of directors.

The foregoing summary of the Bylaws is qualified in its entirety by reference to the full text of the Bylaws, a copy of which is filed as Exhibit 3.2 to this Annual Report on Form 10-K and is incorporated by reference herein. In addition, a marked copy of the Bylaws indicating the changes made to the Company’s bylaws previously in effect is attached as Exhibit 3.3 to this Annual Report on Form 10-K.

Amended Corporate Governance Guidelines

In connection with the adoption of the Bylaws described above, our board of directors also approved an amendment to our Corporate Governance Guidelines to require incumbent director nominees who fail to receive a majority of the votes cast in an uncontested election of directors to submit an offer to resign from our board of directors. The Nominating and Corporate Governance Committee (the “Governance Committee”) of our board of directors must consider any such offer to resign and make a recommendation to our board of directors on whether to accept or reject the resignation. Taking into account the recommendation of the Governance Committee, our board of directors will determine whether to accept or reject any such resignation within 90 days after the certification of the election results, and we will report such decision in a press release, filing with the SEC or by other public announcement. A copy of our Corporate Governance Guidelines is available under “Governance-Governance Documents” in the Investor Relations section of our website, www.armadahoffler.com. The

information on, or accessible through, our website is not incorporated into and does not constitute a part of this Annual Report on Form 10-K or any other report or document we file with or furnish to the SEC.


PART III  


Item 10.Directors, Executive Officers and Corporate Governance.
Item 10.    Directors, Executive Officers and Corporate Governance.
 
This information is incorporated by reference from the Company’s Proxy Statement with respect to the 20182021 Annual Meeting of Stockholders to be filed with the SEC no later than April 30, 2018.2021.  


Item 11.Executive Compensation.  
Item 11.    Executive Compensation.  
 
This information is incorporated by reference from the Company’s Proxy Statement with respect to the 20182021 Annual Meeting of Stockholders to be filed with the SEC no later than April 30, 2018.2021. 


Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 
Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 
 
This information is incorporated by reference from the Company’s Proxy Statement with respect to the 20182021 Annual Meeting of Stockholders to be filed with the SEC no later than April 30, 2018.2021. 


Item 13.Certain Relationships and Related Transactions, and Director Independence.
Item 13.    Certain Relationships and Related Transactions, and Director Independence.
 

This information is incorporated by reference from the Company’s Proxy Statement with respect to the 20182021 Annual Meeting of Stockholders to be filed with the SEC no later than April 30, 2018.2021. 
 
Item 14.Principal Accountant Fees and Services.
Item 14.    Principal Accountant Fees and Services.
 
This information is incorporated by reference from the Company’s Proxy Statement with respect to the 20182021 Annual Meeting of Stockholders to be filed with the SEC no later than April 30, 2018.2021. 



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PART IV  


Item 15.Exhibits and Financial Statement Schedules.  
Item 15.    Exhibits and Financial Statement Schedules.  
 
The following is a list of documents filed as a part of this report:


(1)Financial Statements
(1)Financial Statements
 
Included herein at pages F-1 through F-40.F-51.  
 
(2)Financial Statement Schedules
(2)Financial Statement Schedules
 
The following financial statement schedule is included herein at pages F-41F-52 through F-43:F-54:  
 
Schedule III—Consolidated Real Estate Investments and Accumulated Depreciation
 
All other schedules for which provision is made in Regulation S-X are either not required to be included herein under the related instructions, are inapplicable, or the related information is included in the footnotes to the applicable financial statements and, therefore, have been omitted.
 
(3)Exhibits
(3)Exhibits
 
The exhibits required to be filed by Item 601 of Regulation S-K are listed in the Index to Exhibits of this report and incorporated by reference herein.


Item 16.Form 10-K Summary.  

Item 16.    Form 10-K Summary.  

None.



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INDEX TO EXHIBITS
 
Exhibit

Number
Description
3.1
3.2*
3.3*3.3
4.1
3.4
3.5
3.6
3.7
4.1
10.1
4.2
10.1
10.2†
10.3†
10.4
10.4†
10.5
10.5†
10.6†
10-Q, 10-K, filed on November 12, 2013)
10.7Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc. and Daniel A. Hoffler, dated as of February 11, 2013 (Incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.8Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc. and A. Russell Kirk, dated February 12, 2013 (Incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.9Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc. and Louis S. Haddad, dated as of February 11, 2013 (Incorporated by reference a to Exhibit 10.10 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.10Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc. and Anthony P. Nero, dated as of February 12, 2013 (Incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.11Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Eric E. Apperson, dated as of February 11, 2013 (Incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.1225, 2020)

Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Michael P. O’Hara, dated as of February 11, 2013 (Incorporated by reference to Exhibit 10.13 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.13Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and John C. Davis, dated as of February 11, 2013 (Incorporated by reference to Exhibit 10.14 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.14
Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Alan R. Hunt, dated as of February 11, 2013 (Incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)

10.15
Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Shelly R. Hampton, dated as of February 11, 2013 (Incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)


Table of Contents

Exhibit10.7
Number
Description
10.16Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and William Christopher Harvey, dated as of February 11, 2013 (Incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.17Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Eric L. Smith, dated as of February 12, 2013 (Incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement on Form S-11/A, filed on April 12, 2013)
10.18Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and John E. Babb, dated as of January 31, 2013 (Incorporated by reference to Exhibit 10.19 to the Company’s Registration Statement on Form S-11/A, filed on April 12, 2013)
10.19Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Rickard E. Burnell, dated as of February 12, 2013 (Incorporated by reference to Exhibit 10.20 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.20Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and A/H TWA Associates, L.L.C., dated as of February 11, 2013 (Incorporated by reference to Exhibit 10.21 to the Company’s Registration Statement on Form S-11/A, filed on April 12, 2013)
10.21Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and RMJ Kirk Fortune Bay, L.L.C., dated as of February 11, 2013 (Incorporated by reference to Exhibit 10.22 to the Company’s Registration Statement on Form S-11/A, filed on April 12, 2013)
10.22Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Kirk Gainsborough, L.L.C., dated as of February 11, 2013 (Incorporated by reference to Exhibit 10.23 to the Company’s Registration Statement on Form S-11/A, filed on April 12, 2013)
10.23Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Chris A. Sanders, dated as of January 25, 2013 (Incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.24Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Allen O. Keene, dated as of January 21, 2013 (Incorporated by reference to Exhibit 10.25 to the Company’s Registration Statement on Form S-11/A, filed on April 12, 2013)
10.25Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Bruce G. Ford, dated as of January 31, 2013 (Incorporated by reference to Exhibit 10.26 to the Company’s Registration Statement on Form S-11/A, filed on April 12, 2013)
10.26Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and DIAN, LLC, dated as of January 28, 2013 (Incorporated by reference to Exhibit 10.27 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.27Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Compson of Richmond, L.C., Thomas Comparato and Lindsey Smith Comparato, dated as of January 31, 2013 (Incorporated by reference to Exhibit 10.28 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.28Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Bruce Smith Enterprises, LLC and Bruce B. Smith, dated as of January 31, 2013 (Incorporated by reference to Exhibit 10.29 to the Company’s Registration Statement on Form S-11/A, filed on April 12, 2013)
10.29Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Steyn, LLC, dated as of January 31, 2013 (Incorporated by reference to Exhibit 10.30 to the Company’s Registration Statement on Form S-11/A, filed on April 12, 2013)
10.30Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and D&F Beach, L.L.C., dated as of February 1, 2013 (Incorporated by reference to Exhibit 10.31 to the Company’s Registration Statement on Form S-11/A, filed on April 12, 2013)
10.31Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and DF Smith’s Landing, LLC, dated as of January 31, 2013 (Incorporated by reference to Exhibit 10.32 to the Company’s Registration Statement on Form S-11/A, filed on April 12, 2013)
10.32Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Spratley Family Holdings, L.L.C., dated as of January 22, 2013 (Incorporated by reference to Exhibit 10.33 to the Company’s Registration Statement on Form S-11/A, filed on April 12, 2013)

Table of Contents

Exhibit
Number
Description
10.33Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc., and Columbus One, LLC, DP Columbus Two, LLC, City Center Associates, LLC, TC Block 7 Partners LLC, TC Block 12 Partners LLC, TC Block 3 Partners LLC, TC Block 6 Partners LLC, TC Block 8 Partners LLC, TC Block 11 Partners LLC and TC Apartment Partners, LLC, dated as of February 1, 2013 (Incorporated by reference to Exhibit 10.34 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.34Contribution Agreement for the Apprentice School Apartment property by and among Armada Hoffler, L.P., Washington Avenue Associates, L.L.C. and Washington Avenue Apartments, L.L.C., and dated as of , 2013 (Incorporated by reference to the Company’s Registration Statement on Form S-11/A, filed on May 2, 2013)
10.35Land Option Agreement by and between and Armada Hoffler, L.P. and Courthouse Marketplace Parcel 7, L.L.C., dated as of May 1, 2013 (Incorporated by reference to Exhibit 10.38 to the Company’s Registration Statement on Form S-11/A, filed on May 2, 2013)
10.36Land Option Agreement by and between and Armada Hoffler, L.P. and Courthouse Marketplace Outparcels, L.L.C., dated as of May, 1 2013 (Incorporated by reference to Exhibit 10.39 to the Company’s Registration Statement on Form S-11/A, filed on May 2, 2013)
10.37Land Option Agreement by and between and Armada Hoffler, L.P. and Hanbury Village, LLC, dated as of May 1, 2013 (Incorporated by reference to Exhibit 10.40 to the Company’s Registration Statement on Form S-11/A, filed on May 2, 2013)
10.38Land Option Agreement by and between and Armada Hoffler, L.P. and Lake View AH-VNG, LLC, dated as of May 1, 2013 (Incorporated by to Exhibit 10.41 reference to the Company’s Registration Statement on Form S-11/A, filed on May 2, 2013)
10.39Land Option Agreement by and between and Armada Hoffler, L.P. and Oyster Point Hotel Associates, L.L.C., dated as of May 1, 2013 (Incorporated by reference to Exhibit 10.42 to the Company’s Registration Statement on Form S-11/A, filed on May 2, 2013)
10.40Contribution Agreement by and among Armada Hoffler, L.P., Armada Hoffler Properties, Inc. and Oyster Point Investors, L.P., dated as of February 11, 2013 (Incorporated by reference to Exhibit 10.43 to the Company’s Registration Statement on Form S-11/A, filed on April 26, 2013)
10.41†Form of Restricted Stock Award Agreement for Directors (Incorporated by reference to Exhibit 10.4410.7 to the Company’s Registration Statement on Form S-11/A, filed on May 2, 2013)
10.42Option Agreement dated May 1, 2013 by and between Armada/Hoffler Properties, L.L.C. and Armada Hoffler, L.P. (Incorporated by reference to Exhibit 10.45 to the Company’s Registration Statement on Form S-11/A, filed on May 2, 2013)
10.43Option Transfer Agreement by and among Town Center Associates, L.L.C. Armada/Hoffler Properties, L.L.C., City Center Associates, L.L.C. and Armada Hoffler, L.P., dated as of May 10, 2013 (Incorporated by reference to Exhibit 10.14 to the Company’s QuarterlyAnnual Report on Form 10-Q,10-K, filed on August 14, 2013)February 24, 2020)
10.44
10.8
10.45†
10.9
Armada Hoffler Properties, Inc. Short-Term Incentive Program (Incorporated by reference to Exhibit 10.53 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed on March 16, 2015)
10.46
10.47
10.10
Construction Loan
10.48Agreement of Sale and Purchase, dated as of November 2, 2015, by and between AH Richmond Tower I, LLC and Kireland Management, LLCMay 13, 2013 (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on January 13, 2016)June 17, 2019)
10.49
10.11
First
67
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Exhibit
Number		Description
10.12
10.13

Table of Contents

10.14†

Exhibit
Number10.15
Description
10.50Purchase and Sale Agreement, dated as of December 3, 2015, by and between DDR-SAU South Square, L.L.C., DDR-SAU Durham Patterson, L.L.C., DDR-SAU Wendover Phase II, L.L.C., DDR-SAU Salisbury Alexander, L.L.C., DDR-SAU Winston-Salem Harper Hill, L.L.C., DDR-SAU Greer North Hampton Market, L.L.C., DDR-SAU Nashville Willowbrook, L.L.C., DDR-SAU South Bend Broadmoor, L.L.C., DDR-SAU Oakland, L.L.C., DDR-SAU Waynesboro, L.L.C., DDR-SAU Pasadena Red Bluff Limited Partnership and AHP Acquisitions, LLC (Incorporated by reference to Exhibit 10.55 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed on March 2, 2016)
10.51First Amendment to Purchase and Sale Agreement, dated as of December 14, 2015, by and between DDR-SAU South Square, L.L.C., DDR-SAU Durham Patterson, L.L.C., DDR-SAU Wendover Phase II, L.L.C., DDR-SAU Salisbury Alexander, L.L.C., DDR-SAU Winston-Salem Harper Hill, L.L.C., DDR-SAU Greer North Hampton Market, L.L.C., DDR-SAU Nashville Willowbrook, L.L.C., DDR-SAU South Bend Broadmoor, L.L.C., DDR-SAU Oakland, L.L.C., DDR-SAU Waynesboro, L.L.C., DDR-SAU Pasadena Red Bluff Limited Partnership and AHP Acquisitions, LLC (Incorporated by reference to Exhibit 10.56 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed on March 2, 2016)
10.52Form of Performance Unit Award Agreement (Incorporated by reference to Exhibit 10.57 to the Company's Annual Report on Form 10-K, filed March 1, 2017)
10.53
10.54
10.16
21.1*
23.1*
31.1*
31.2*
32.1**
32.2**
101.INS*101*The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, were formatted in Inline XBRL Instance Document(Extensible Business Reporting Language): (i) Consolidated Balance Sheet, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*104*Cover page Interactive Data File - the cover page XBRL Taxonomy Extension Schema Documenttags are embedded within the Inline XBRL.
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*XBRL Taxonomy Extension Presentation Linkbase Document
*Filed herewith
**Furnished herewith
†Management contract or compensatory plan or arrangement





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SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: February 23, 20182021 
 
ARMADA HOFFLER PROPERTIES, INC.
By:/s/ Louis S. Haddad
Louis S. Haddad
President and Chief Executive Officer
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
SignatureTitleDate
SignatureTitleDate
/s/ Daniel A. HofflerExecutive Chairman and DirectorFebruary 23, 20182021
Daniel A. Hoffler
/s/ A. Russell KirkVice Chairman and DirectorFebruary 23, 2018
A. Russell Kirk
/s/ Louis S. HaddadVice Chairman, President, Chief Executive Officer and DirectorFebruary 23, 20182021
Louis S. Haddad(principal executive officer)
/s/ Michael P. O’HaraChief Financial Officer, Treasurer, and TreasurerSecretaryFebruary 23, 20182021
Michael P. O’Hara(principal financial officer and principal accounting officer)
/s/ George F. AllenDirectorFebruary 23, 20182021
George F. Allen
/s/ James A. CarrollDirectorFebruary 23, 20182021
James A. Carroll
/s/ James C. CherryDirectorFebruary 23, 20182021
James C. Cherry
/s/ Eva S. HardyDirectorFebruary 23, 20182021
Eva S. Hardy
/s/ A. Russell KirkDirectorFebruary 23, 2021
A. Russell Kirk
/s/ Dorothy S. McAuliffeDirectorFebruary 23, 2021
Dorothy S. McAuliffe
/s/ John W. SnowDirectorFebruary 23, 20182021
John W. Snow

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Armada Hoffler Properties, Inc.
 
Form 10-K
For the Fiscal Year Ended December 31, 20172020 
 
Item 8, Item 15(a)(1) and (2)
 
Index to Financial Statements and Schedule
 
F-F-22
F-3
F-F-36
F-F-47
F-F-58
F-F-69
F-F-710
F-F-4150



F-1
Table of Contents
Report of Independent Registered Public Accounting Firm


To the Stockholders and the Board of Directors of Armada Hoffler Properties, Inc.

Opinion on theInternal Control over Financial Statements

Reporting
We have audited Armada Hoffler Properties, Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the accompanying consolidated balance sheetsCommittee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Armada Hoffler Properties, Inc. (the Company), maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017 and 2016, and2020, based on the related consolidated statements of comprehensive income, equity and cash flows for eachCOSO criteria.
We also have audited, in accordance with the standards of the three years inPublic Company Accounting Oversight Board (United States) (PCAOB), the period ended December 31, 2017, and the related notes and the financial statement schedule listed in the Index at Item 15(2) (collectively referred to as the "consolidated financial statements"). In our opinion, the2020 consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

our report dated February 23, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
TheseThe Company’s management is responsible for maintaining effective internal control over financial statements are the responsibilityreporting and for its assessment of the Company's management.effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial statementsreporting based on our audits.audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP



Tysons, Virginia

February 23, 2021
F-2
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Armada Hoffler Properties, Inc.
 Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Armada Hoffler Properties, Inc. (the Company) as of December 31, 2020 and 2019, the related consolidated statements of comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and Financial Statement Schedule listed in the Index at Item 15(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 23, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.


Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
F-3
Table of Contents
Allowance for Loan Losses - Notes Receivable
Description of the Matter
/s/ Ernst & Young LLPAt December 31, 2020, the Company’s notes receivable portfolio totaled $135.4 million, net of allowances of $2.6 million. As discussed in Notes 2 and 6 to the consolidated financial statements, management estimates the allowance for loan losses on outstanding notes receivable based primarily upon relevant historical loan loss data sets, the forecast for macroeconomic conditions, loan-to-value of the underlying project, remaining contractual loan term, and other relevant loan-specific factors. For loans experiencing financial difficulty as of the measurement date, the Company recognizes expected credit losses calculated as the difference between the amortized cost basis of the financial asset and the estimated fair value of the collateral, which includes an estimation of the projected sales proceeds from the sale of the underlying property.


Auditing management’s estimate of the allowance for loan losses was complex and highly judgmental due to the significant estimation required to determine the estimated fair value of the collateral. In particular, the estimated fair value of the collateral was highly sensitive to significant assumptions based on management’s expectations about future real estate market or economic conditions and the projected operating results of the property.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the allowance for loan losses process. For example, we tested controls over management’s review of the estimated allowance, the significant assumptions, and the data used to calculate the estimated fair value of the collateral.

To test the allowance for loan losses, we performed audit procedures that included, among others, assessing methodologies used and testing the significant assumptions and underlying data used by the Company in calculating the estimated fair value of the collateral. We compared the significant assumptions used by management to external evidence, including comparable market capitalization rates and recent market activity of similar property transactions. We tested the projected operating results of properties by comparing inputs and assumptions to executed or draft lease agreements and operating expenses incurred at similar operating properties owned by the Company. We performed sensitivity analyses of significant assumptions to evaluate the changes to the estimated fair value of the collateral that would result from changes in the assumptions. We also assessed the historical accuracy of management’s estimates.
General contracting revenue recognition
Description of the Matter
For the year ended December 31, 2020, the Company’s general contracting revenues totaled approximately $217.1 million. As described in Notes 2 and 7 to the consolidated financial statements, for each construction contract, the Company estimates its progress in satisfying performance obligations based on the proportion of incurred costs to total estimated costs at completion. The Company also estimates the total transaction price, including variable components, for each construction contract.

Auditing the Company’s measurement of general contracting revenue was challenging due to the significant estimation required to determine the estimated total costs at completion and variable consideration. Estimated costs at completion are affected by management’s forecasts of anticipated costs to be incurred and contingency reserves for exposures related to unknown costs, such as design deficiencies and subcontractor defaults. Estimated variable consideration is affected by claims and unapproved change orders, which may result from changes in the scope of the contract.
F-4
Table of Contents
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the measurement of general contracting revenue. For example, we tested controls over management’s review and monitoring of the variable consideration calculation and the underlying assumptions related to estimates of costs at completion.

To test general contracting revenue recognition, our audit procedures included, among others, evaluating the estimates discussed above and testing the completeness and accuracy of the underlying data used by the Company to calculate variable consideration and total estimated costs at completion. For example, we tested variable consideration by inspecting subsequently executed change orders, reviewing legally enforceable terms of the contracts or confirming the value of executed change orders directly with the customers. We also confirmed directly with customers specific contract details, including the current and original contract value as well as the estimated percentage of completion. We tested the estimated costs at completion by comparing management’s cost estimates of materials, labor, and subcontractors to third-party evidence, such as subcontractor bids. In addition, we visited property sites, conducted interviews with the Company’s project management personnel, and involved our engineering specialists to assist in testing the Company’s estimated costs at completion. We also assessed the historical accuracy of management’s estimates of variable consideration and estimated costs at completion through retrospective review of actual gross-margins of completed projects compared to the anticipated gross margins during the projects.
Accounting for Acquisition of Operating Properties
Description of the Matter
During 2020, the Company completed three operating property acquisitions for a total purchase price of $188.8 million as described in Notes 2 and 5 to the consolidated financial statements. These transactions were accounted for as asset acquisitions.

Auditing the Company's accounting for these acquisitions was challenging due to the significant estimation required by management to determine the fair values of the acquired assets used to allocate costs of the acquisitions on a relative fair value basis. The significant estimation was primarily due to the sensitivity of the respective fair values to underlying assumptions. The significant assumptions used to estimate the values of the tangible and intangible assets included the replacement cost of the properties, total lease-up time and lost rental revenues during such time, market rents, estimated future cash flows and other valuation assumptions.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s acquisition and purchase price allocation process, including controls over management’s review of the significant assumptions described above. For example, we tested controls over management’s review of the valuation methodology, the purchase price allocation, and the significant assumptions used.

To test the costs allocated to the tangible and intangible assets, we involved our valuation specialists and performed audit procedures that included, among others, evaluating the Company’s valuation methodologies, testing the significant assumptions described above and testing the completeness and accuracy of the underlying data. For example, we compared the significant assumptions to observable market data, including other properties within the same submarkets and to historical costs incurred by the Company in developing and constructing similar assets. We also performed sensitivity analyses of the significant assumptions to evaluate the change in fair values resulting from the changes in assumptions. In addition, we compared the Company’s estimated fair values of acquired assets to independent estimates developed by our valuation specialist.


/s/ Ernst & Young LLP

We have served as the Company'sCompany’s auditor since 2012.

Tysons, Virginia
February 23, 2018 2021




F-5
Table of Contents
ARMADA HOFFLER PROPERTIES, INC.
Consolidated Balance Sheets
(In thousands, except par value and share data)
 DECEMBER 31,
 20202019
ASSETS  
Real estate investments:  
Income producing property$1,680,943 $1,460,723 
Held for development13,607 5,000 
Construction in progress63,367 140,601 
 1,757,917 1,606,324 
Accumulated depreciation(253,965)(224,738)
Net real estate investments1,503,952 1,381,586 
Real estate investments held for sale1,165 1,460 
Cash and cash equivalents40,998 39,232 
Restricted cash9,432 4,347 
Accounts receivable, net28,259 23,470 
Notes receivable, net135,432 159,371 
Construction receivables, including retentions, net38,735 36,361 
Construction contract costs and estimated earnings in excess of billings138 249 
Equity method investment1,078 0 
Operating lease right-of-use assets32,760 33,088 
Finance lease right-of-use assets23,544 24,130 
Acquired lease intangible assets58,154 68,702 
Other assets43,324 32,901 
Total Assets$1,916,971 $1,804,897 
LIABILITIES AND EQUITY  
Indebtedness, net$963,845 $950,537 
Accounts payable and accrued liabilities23,900 17,803 
Construction payables, including retentions49,821 53,382 
Billings in excess of construction contract costs and estimated earnings6,088 5,306 
Operating lease liabilities41,659 41,474 
Finance lease liabilities17,954 17,903 
Other liabilities56,902 63,045 
Total Liabilities1,160,169 1,149,450 
Stockholders’ equity:  
Preferred stock, $0.01 par value, 100,000,000 shares authorized:
  6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, 9,980,000 and
  2,930,000 shares authorized as of December 31, 2020 and 2019, respectively, 6,843,418
  and 2,530,000 shares issued and outstanding as of December 31, 2020 and 2019,
  respectively
171,085 63,250 
Common stock, $0.01 par value, 500,000,000 shares authorized; 59,073,220 and 56,277,971 shares issued and outstanding as of December 31, 2020 and 2019, respectively591 563 
Additional paid-in capital472,747 455,680 
Distributions in excess of earnings(112,356)(106,676)
Accumulated other comprehensive loss(8,868)(4,240)
Total stockholders’ equity523,199 408,577 
Noncontrolling interests in investment entities488 4,462 
Noncontrolling interests in Operating Partnership233,115 242,408 
Total Equity756,802 655,447 
Total Liabilities and Equity$1,916,971 $1,804,897 
 DECEMBER 31, 
 2017 2016
ASSETS   
Real estate investments:   
Income producing property$910,686
 $894,078
Held for development680
 680
Construction in progress83,071
 13,529
 994,437
 908,287
Accumulated depreciation(164,521) (139,553)
Net real estate investments829,916
 768,734
Cash and cash equivalents19,959
 21,942
Restricted cash2,957
 3,251
Accounts receivable, net15,691
 15,052
Notes receivable83,058
 59,546
Construction receivables, including retentions23,933
 39,433
Construction contract costs and estimated earnings in excess of billings245
 110
Equity method investments11,411
 10,235
Other assets55,953
 64,165
Total Assets$1,043,123
 $982,468
LIABILITIES AND EQUITY   
Indebtedness, net$517,272
 $522,180
Accounts payable and accrued liabilities15,180
 10,804
Construction payables, including retentions47,445
 51,130
Billings in excess of construction contract costs and estimated earnings3,591
 10,167
Other liabilities39,352
 39,209
Total Liabilities622,840
 633,490
Stockholders’ equity:   
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding as of December 31, 2017 and 2016, respectively—
 —
Common stock, $0.01 par value, 500,000,000 shares authorized, 44,937,763 and 37,490,361 shares issued and outstanding as of December 31, 2017 and 2016, respectively449
 374
Additional paid-in capital287,407
 197,114
Distributions in excess of earnings(61,166) (49,345)
Total stockholders’ equity226,690
 148,143
Noncontrolling interests193,593
 200,835
Total Equity420,283
 348,978
Total Liabilities and Equity$1,043,123
 $982,468

See Notes to Consolidated Financial Statements.

F-6

Table of Contents
ARMADA HOFFLER PROPERTIES, INC.
Consolidated Statements ofComprehensiveIncome  
(In thousands, except per shareand unitdata)
 YEARS ENDED DECEMBER 31,
 202020192018
Revenues            
Rental revenues$166,488 $151,339 $116,958 
General contracting and real estate services revenues217,146 105,859 76,359 
Total revenues383,634 257,198 193,317 
Expenses   
Rental expenses38,960 34,332 27,222 
Real estate taxes18,136 14,961 11,383 
General contracting and real estate services expenses209,472 101,538 73,628 
Depreciation and amortization59,972 54,564 39,913 
Amortization of right-of-use assets - finance leases586 377 0 
General and administrative expenses12,905 12,392 11,431 
Acquisition, development and other pursuit costs584 844 352 
Impairment charges666 252 1,619 
Total expenses341,281 219,260 165,548 
Gain on real estate dispositions6,388 4,699 4,254 
Operating income48,741 42,637 32,023 
Interest income19,841 23,215 10,729 
Interest expense on indebtedness(30,120)(30,776)(19,087)
Interest expense on finance leases(915)(568)0 
Equity in income of unconsolidated real estate entities0 273 372 
Change in fair value of derivatives and other(1,130)(3,599)(951)
Provision for unrealized credit losses(256)0 0 
Other income (expense), net515 585 377 
Income before taxes36,676 31,767 23,463 
Income tax benefit283 491 29 
Net income36,959 32,258 23,492 
Net (income) loss attributable to noncontrolling interests:
Investment entities230 (213)0 
Operating Partnership(8,037)(7,992)(6,289)
Net income attributable to Armada Hoffler Properties, Inc.29,152 24,053 17,203 
Preferred stock dividends(7,349)(2,455)0 
Net income attributable to common stockholders$21,803 $21,598 $17,203 
Net income attributable to common stockholders per share (basic and diluted)$0.38 $0.41 $0.36 
Weighted-average common shares outstanding (basic and diluted)57,328 53,119 47,512 
Comprehensive income: 
Net income$36,959 $32,258 $23,492 
Unrealized cash flow hedge losses(9,751)(4,504)(1,894)
Realized cash flow hedge losses reclassified to net income3,345 501 169 
Comprehensive income30,553 28,255 21,767 
Comprehensive (income) loss attributable to noncontrolling interests:
Investment entities230 (213)0 
Operating Partnership(6,259)(6,946)(5,847)
Comprehensive income attributable to Armada Hoffler Properties, Inc.$24,524 $21,096 $15,920 
 YEARS ENDED DECEMBER 31,
 2017 2016 2015
Revenues              
Rental revenues$108,737
 $99,355
 $81,172
General contracting and real estate services revenues194,034
 159,030
 171,268
Total revenues302,771
 258,385
 252,440
Expenses     
Rental expenses25,422
 21,904
 19,204
Real estate taxes10,528
 9,629
 7,782
General contracting and real estate services expenses186,590
 153,375
 165,344
Depreciation and amortization37,321
 35,328
 23,153
General and administrative expenses10,435
 9,552
 8,397
Acquisition, development and other pursuit costs648
 1,563
 1,935
Impairment charges110
 355
 41
Total expenses271,054
 231,706
 225,856
Operating income31,717
 26,679
 26,584
Interest income7,077
 3,228
 126
Interest expense(17,439) (16,466) (13,333)
Loss on extinguishment of debt(50) (82) (512)
Gain on real estate dispositions8,087
 30,533
 18,394
Change in fair value of interest rate derivatives1,127
 (941) (229)
Other income131
 147
 119
Income before taxes30,650
 43,098
 31,149
Income tax benefit (provision)(725) (343) 34
Net income29,925
 42,755
 31,183
Net income attributable to noncontrolling interests(8,878) (14,681) (11,541)
Net income attributable to stockholders$21,047
 $28,074
 $19,642
Net income per share and unit:     
Basic and diluted$0.50
 $0.85
 $0.75
Weighted-average outstanding:     
Common shares42,423
 33,057
 26,006
Common units17,758
 17,167
 15,377
Basic and diluted60,181
 50,224
 41,383
Comprehensive income: 
  
  
Net income$29,925
 $42,755
 $31,183
Unrealized cash flow hedge losses—
 —
 (1,075)
Realized cash flow hedge losses reclassified to net income—
 —
 27
Comprehensive income29,925
 42,755
 30,135
Comprehensive income attributable to noncontrolling interests(8,878) (14,681) (11,141)
Comprehensive income attributable to stockholders$21,047
 $28,074
 $18,994


See Notes to Consolidated Financial Statements.

F-7
Table of Contents
ARMADA HOFFLER PROPERTIES, INC.
Consolidated Statements of Equity  
(In thousands, except share data)
 Preferred stockCommon stockAdditional paid-in capitalDistributions in excess of earningsAccumulated other comprehensive lossTotal stockholders' equityNoncontrolling interests in investment entitiesNoncontrolling interests in Operating PartnershipTotal equity
Balance, January 1, 2018$0 $449 $287,407 $(61,166)$0 $226,690 $0 $193,593 $420,283 
Net income— — — 17,203 — 17,203 — 6,289 23,492 
Unrealized cash flow hedge losses— — — — (1,410)(1,410)— (484)(1,894)
Realized cash flow hedge losses reclassified to net income— — — — 127 127 — 42 169 
Net proceeds from issuance of common stock— 46 65,198 — — 65,244 — — 65,244 
Restricted stock awards, net of tax withholding— 2 1,562 — — 1,564 — — 1,564 
Restricted stock award forfeitures— — (32)— — (32)— — (32)
Issuance of operating partnership units for acquisitions— — (5)— — (5)— 2,201 2,196 
Redemption of operating partnership units— 3 3,223 — — 3,226 — (5,821)(2,595)
Dividends and distributions declared— — — (38,736)— (38,736)— (13,801)(52,537)
Balance, December 31, 20180 500 357,353 (82,699)(1,283)273,871 0 182,019 455,890 
Cumulative effect of accounting change (1)
— — — (125)— (125)— (42)(167)
Net income— — — 24,053 — 24,053 213 7,992 32,258 
Unrealized cash flow hedge losses— — — — (3,321)(3,321)— (1,183)(4,504)
Realized cash flow hedge losses reclassified to net income— — — — 364 364 — 137 501 
Net proceeds from issuance of cumulative redeemable perpetual preferred stock63,250 — (2,249)— — 61,001 — — 61,001 
Net proceeds from issuance of common stock— 59 96,786 — — 96,845 — — 96,845 
Restricted stock awards, net of tax withholding— 2 2,029 — — 2,031 — — 2,031 
Noncontrolling interest in acquired real estate entity— — — — — — 4,870 — 4,870 
Restricted stock award forfeitures— — (7)— — (7)— — (7)
Issuance of operating partnership units for acquisitions— — (986)— — (986)— 73,169 72,183 
Redemption of operating partnership units— 2 2,754 — — 2,756 — (2,756)0 
Distributions to Joint Venture Partners— — — — — — (621)— (621)
Dividends declared on preferred stock— — — (2,455)— (2,455)— — (2,455)
Dividends and distributions declared on common shares and units— — — (45,450)— (45,450)— (16,928)(62,378)
Balance, December 31, 201963,250 563 455,680 (106,676)(4,240)408,577 4,462 242,408 655,447 
Cumulative effect of accounting change (2)
— — — (2,185)— (2,185)— (824)(3,009)
Net income (loss)— — — 29,152 — 29,152 (230)8,037 36,959 
Unrealized cash flow hedge losses— — — — (7,082)(7,082)— (2,669)(9,751)
Realized cash flow hedge losses reclassified to net income— — — — 2,454 2,454 — 891 3,345 
Net proceeds from issuance of cumulative redeemable perpetual preferred stock107,835 — (6,375)— — 101,460 — — 101,460 
Net proceeds from issuance of common stock— 19 19,631 — — 19,650 — — 19,650 
Restricted stock awards, net of tax withholding— 2 2,351 — — 2,353 — — 2,353 
Restricted stock award forfeitures— — (11)— — (11)— — (11)
Acquisitions of noncontrolling interests— — (7,388)— — (7,388)(3,744)6,099 (5,033)
Redemption of operating partnership units— 7 8,859 — — 8,866 — (11,595)(2,729)
Dividends declared on preferred stock— — — (7,349)— (7,349)— — (7,349)
Dividends and distributions declared on common shares and units— — — (25,298)— (25,298)— (9,232)(34,530)
Balance, December 31, 2020$171,085 $591 $472,747 $(112,356)$(8,868)$523,199 $488 $233,115 $756,802 
 
Shares of
common
stock
 
Common
stock
 
Additional
paid-
in capital
 
Distributions
in excess of
earnings
 
Accumulated
other
comprehensive
loss
 
Total
stockholders’
equity (deficit)
 
Noncontrolling
interests
 
Total
Equity
Balance, January 1, 201525,022,701
 $250
 $51,472
 $(54,413) $—
 $(2,691) $164,597
 $161,906
Net income—
 —
 —
 19,642
 —
 19,642
 11,541
 31,183
Unrealized cash flow hedge losses—
 —
 —
 —
 (665) (665) (410) (1,075)
Realized cash flow hedge losses reclassified to net income—
 —
 —
 —
 17
 17
 10
 27
Net proceeds from sale of common stock4,560,049
 45
 45,990
 —
 —
 46,035
 —
 46,035
Restricted stock awards78,109
 1
 992
 —
 —
 993
 —
 993
Acquisitions of real estate investments415,500
 4
 4,429
 —
 —
 4,433
 10,736
 15,169
Exchange of owners’ equity for common units—
 —
 23
 —
 —
 23
 (264) (241)
Dividends and distributions declared—
 —
 —
 (18,239) —
 (18,239) (10,038) (28,277)
Balance, December 31, 201530,076,359
 $300
 $102,906
 $(53,010) $(648) $49,548
 $176,172
 $225,720
Net income—
 —
 —
 28,074
 —
 28,074
 14,681
 42,755
Dedesignation of cash flow hedge—
 —
 —
 —
 648
 648
 400
 1,048
Net proceeds from sale of common stock5,312,855
 53
 66,969
 —
 —
 67,022
 —
 67,022
Restricted stock awards101,147
 1
 1,161
 —
 —
 1,162
 —
 1,162
Acquisitions of real estate investments2,000,000
 20
 26,080
 —
 —
 26,100
 21,178
 47,278
Redemption of operating partnership units—
 —
 (2) —
 —
 (2) (56) (58)
Dividends and distributions declared—
 —
 —
 (24,409) —
 (24,409) (11,540) (35,949)
Balance, December 31, 201637,490,361
 $374
 $197,114
 $(49,345) $—
 $148,143
 $200,835
 $348,978
Net income—
 —
 —
 21,047
 —
 21,047
 8,878
 29,925
Net proceeds from sales of common stock7,350,690
 74
 91,307
 —
 —
 91,381
 —
 91,381
Restricted stock awards97,173
 1
 1,442
 —
 —
 1,443
 —
 1,443
Restricted stock award forfeitures(461) —
 (2) —
 —
 (2) —
 (2)
Acquisitions of noncontrolling interests in real estate investments—
 —
 (1,493) —
 —
 (1,493) 982
 (511)
Redemption of operating partnership units—
 —
 (961) —
 —
 (961) (4,194) (5,155)
Dividends and distributions declared—
 —
 —
 (32,868) —
 (32,868) (12,908) (45,776)
Balance, December 31, 201744,937,763
 $449
 $287,407
 $(61,166) $—
 $226,690
 $193,593
 $420,283

(1) The Company recorded cumulative effect adjustments related to the new lease standard in the first quarter of 2019. See "Financial Statements — Note 2 — Significant Accounting Policies — Recent Accounting Pronouncements" for additional information.
(2) The Company recorded cumulative effect adjustments related to the new Current Expected Credit Losses ("CECL") standard in the first quarter of 2020. See "Financial Statements — Note 2 — Significant Accounting Policies — Recent Accounting Pronouncements" for additional information.

See Notes to Consolidated Financial Statements.

F-8
Table of Contents
ARMADA HOFFLER PROPERTIES, INC.
Consolidated Statements of Cash Flows  
(In thousands)
 YEARS ENDED DECEMBER 31, 
 202020192018
OPERATING ACTIVITIES            
Net income$36,959 $32,258 $23,492 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation of buildings and tenant improvements43,671 37,839 30,395 
Amortization of leasing costs, in-place lease intangibles and below market ground rents - operating leases16,301 16,725 9,518 
Accrued straight-line rental revenue(5,927)(3,402)(2,731)
Amortization of leasing incentives and above or below-market rents(814)(629)(266)
Amortization of right-of-use assets - finance leases586 377 0 
Accrued straight-line ground rent expense100 (16)214 
Provision for unrealized credit losses256 0 0 
Adjustment for uncollectable accounts3,842 511 419 
Noncash stock compensation2,378 1,613 1,281 
Impairment charges666 252 1,619 
Noncash interest expense2,204 1,258 1,116 
Interest expense on finance leases915 568 0 
Gain on real estate dispositions(6,388)(4,699)(4,254)
Adjustment for Annapolis Junction modification fee (1)
0 (4,489)4,489 
Change in the fair value of interest rate derivatives1,130 3,599 951 
Equity in income of unconsolidated real estate entities0 (273)(372)
Changes in operating assets and liabilities:   
Property assets(5,960)(2,499)(3,539)
Property liabilities5,762 3,368 1,720 
Construction assets(2,302)(20,356)7,554 
Construction liabilities13,708 18,671 (15,248)
Interest receivable(15,908)(12,947)(271)
Net cash provided by operating activities91,179 67,729 56,087 
INVESTING ACTIVITIES   
Development of real estate investments(63,485)(133,445)(133,791)
Tenant and building improvements(10,077)(19,721)(11,723)
Acquisitions of real estate investments, net of cash received(35,151)(138,380)(57,544)
Dispositions of real estate investments, net of selling costs96,459 32,944 34,673 
Notes receivable issuances(24,484)(54,555)(58,208)
Notes receivable paydowns16,340 22,522 1,165 
Leasing costs(3,425)(3,893)(4,607)
Leasing incentives(1,326)0 (108)
Contributions to equity method investments(1,078)(535)(10,420)
Net cash used for investing activities(26,227)(295,063)(240,563)
FINANCING ACTIVITIES   
Proceeds from issuance of cumulative redeemable perpetual preferred stock, net101,460 61,001 0 
Proceeds from issuance of common stock, net19,650 96,845 65,244 
Common shares tendered for tax withholding(569)(369)(409)
Debt issuances, credit facility and construction loan borrowings176,619 427,286 349,580 
Debt and credit facility repayments, including principal amortization(299,318)(270,851)(173,855)
Debt issuance costs(609)(5,546)(1,457)
Acquisition of NCI in consolidated RE investments(5,002)0 0 
Redemption of operating partnership units(2,729)0 (2,595)
Dividends and distributions(47,603)(61,504)(50,897)
Net cash provided by (used for) financing activities(58,101)246,862 185,611 
Net increase in cash, cash equivalents, and restricted cash6,851 19,528 1,135 
Cash, cash equivalents, and restricted cash, beginning of period (2)
43,579 24,051 22,916 
Cash, cash equivalents, and restricted cash, end of period (2)
$50,430 $43,579 $24,051 
 See Notes to Consolidated Financial Statements.
ARMADA HOFFLER PROPERTIES, INC.
Consolidated Statements of Cash Flows (Continued) 
(In thousands)
YEARS ENDED DECEMBER 31, 
202020192018
Supplemental cash flow information:   
Cash paid for interest$28,554 $28,878 $17,319 
Cash refunded for income taxes167 247 31 
Increase (decrease) in dividends payable(5,724)3,950 1,640 
Common shares and OP units issued for acquisitions6,099 73,169 1,702 
(Decrease) increase in accrued capital improvements and development costs(14,324)(12,666)18,310 
Operating Partnership units redeemed for common shares8,866 2,756 3,715 
Note payable recorded for mandatorily redeemable partnership interest3,829 0 0 
Debt assumed at fair value in conjunction with real estate purchases122,300 101,390 0 
Note receivable extinguished in conjunction with real estate purchase42,270 31,252 0 
Equity method investment redeemed for real estate acquisition0 23,011 0 
Noncontrolling interest in acquired real estate entity0 4,870 0 
Note payable issued in acquisition of noncontrolling interest in real estate investment6,130 0 0 
Recognition of operating lease right-of-use assets (3)
0 33,965 0 
Recognition of operating lease liabilities (3)
0 41,631 0 
Recognition of finance lease right-of-use assets0 24,500 0 
Recognition of finance lease liabilities0 17,871 0 
De-recognition of operating lease ROU assets - lease termination0 440 0 
De-recognition of operating lease liabilities - lease termination0 440 0 
 YEARS ENDED DECEMBER 31, 
 2017 2016 2015
OPERATING ACTIVITIES              
Net income$29,925
 $42,755
 $31,183
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation of buildings and tenant improvements25,974
 23,453
 18,678
Amortization of leasing costs and in-place lease intangibles11,347
 11,875
 4,475
Accrued straight-line rental revenue(1,222) (1,091) (1,924)
Amortization of leasing incentives and above or below-market rents(195) (85) 738
Accrued straight-line ground rent expense530
 371
 290
Bad debt expense564
 203
 131
Noncash stock compensation1,323
 1,082
 931
Impairment charges110
 355
 41
Noncash interest expense1,274
 980
 1,006
Noncash loss on extinguishment of debt50
 82
 512
Gain on real estate dispositions(8,087) (30,533) (18,394)
Change in the fair value of interest rate derivatives(1,127) 941
 229
Changes in operating assets and liabilities:     
Property assets(2,415) (2,964) (2,283)
Property liabilities2,504
 3,761
 2,326
Construction assets17,573
 (6,385) (17,337)
Construction liabilities(20,110) 15,189
 12,664
Net cash provided by operating activities58,018
 59,989
 33,266
INVESTING ACTIVITIES     
Development of real estate investments(45,730) (57,425) (52,719)
Tenant and building improvements(12,252) (6,698) (5,157)
Acquisitions of real estate investments, net of cash received(30,026) (195,645) (68,445)
Dispositions of real estate investments12,557
 96,670
 79,566
Notes receivable issuances(23,290) (51,721) (7,825)
Government development grants—
 —
 300
Leasing costs(2,235) (2,374) (2,118)
Leasing incentives(274) (236) (1,563)
Contributions to equity method investments(1,176) (8,824) —
Net cash used for investing activities(102,426) (226,253) (57,961)
FINANCING ACTIVITIES     
Proceeds from sales of common stock96,044
 68,475
 46,462
Offering costs(4,663) (1,453) (427)
Debt issuances, credit facility and construction loan borrowings162,585
 316,852
 214,407
Debt and credit facility repayments, including principal amortization(160,661) (186,533) (206,889)
Debt issuance costs(2,403) (1,796) (1,887)
Redemption of operating partnership units(5,155) (58) (241)
Dividends and distributions(43,616) (33,843) (27,024)
Net cash provided by financing activities42,131
 161,644
 24,401
Net decrease in cash, cash equivalents, and restricted cash(2,277) (4,620) (294)
Cash, cash equivalents, and restricted cash, beginning of period25,193
 29,813
 30,107
Cash, cash equivalents, and restricted cash, end of period$22,916
 $25,193
 $29,813
Supplemental cash flow information:     
Cash paid for interest$(16,318) $(15,326) $(12,993)
Cash refunded (paid) for income taxes$(371) $(121) $276
Common shares and OP Units issued for acquisitions (1)
$506
 $47,278
 $15,169
Change in accrued capital improvements and development costs$(10,899) $8,183
 $1,825
Debt principal extinguished in conjunction with real estate sales$5,594
 $6,400
 $—
Debt principal assumed in conjunction with real estate acquisitions$—
 $21,150
 $13,824


(1) 2017 issuance consistsBorrower paid $5.0 million in 2018 in exchange for the Company's purchase option. This was accounted for as a loan modification fee; interest income was recognized as additional interest income on the note receivable over the one-year remaining term.

(2) The following table sets forth the items from the Company's Consolidated Balance Sheets that are included in cash, cash equivalents, and restricted cash in the consolidated statements of OP Units contingently issuable upon the satisfactioncash flows:
 As of December 31,
 20202019
Cash and cash equivalents$40,998 $39,232 
Restricted cash (a)
9,432 4,347 
Cash, cash equivalents, and restricted cash$50,430 $43,579 
(a) Restricted cash represents amounts held by lenders for real estate taxes, insurance, and reserves for capital improvements.


(3) Amounts attributable to 2019 are net of certain conditions relating$0.4 million related to the Johns Hopkins VillageCompany's preexisting lease at the Thames Street Wharf property, which was acquired on June 26, 2019.



See Notes to Consolidated Financial Statements.

F-9
Table of Contents
ARMADA HOFFLER PROPERTIES, INC.
Notes to Consolidated Financial Statements  
 
1.Business and Organization
1.    Business and Organization
 
Armada Hoffler Properties, Inc. (the “Company”"Company") is a full service real estate company with extensive experience developing, building, owning, and managing high-quality, institutional-grade office, retail, and multifamily properties in attractive markets primarily throughout the Mid-Atlantic and Southeastern United States.
 
The Company is a real estate investment trust ("REIT"), and is the sole general partner of Armada Hoffler, L.P. (the “Operating Partnership”"Operating Partnership"), and as of December 31, 2017,2020, owned 72.0%73.9% of the economic interest in the Operating Partnership, of which 0.1% is held as general partnership units. The operations of the Company are carried on primarily through the Operating Partnership and the wholly owned subsidiaries of the Operating Partnership. Both the Company and the Operating Partnership were formed on October 12, 2012 and commenced operations upon completion of the underwritten initial public offering of shares of the Company’s common stock (the “IPO”"IPO") and certain related formation transactions on May 13, 2013.
 




As of December 31, 2017,2020, the Company's operating portfolio consisted of the following properties:  
PropertySegmentLocationOwnership Interest
4525 Main StreetOfficeVirginia Beach, Virginia*100%
Armada Hoffler TowerOfficeVirginia Beach, Virginia*100%
Brooks Crossing OfficeOfficeNewport News, Virginia100%
One City CenterOfficeDurham, North Carolina100%
One ColumbusOfficeVirginia Beach, Virginia*100%
Thames Street WharfOfficeBaltimore, Maryland100%
Two ColumbusOfficeVirginia Beach, Virginia*100%
249 Central Park RetailRetailVirginia Beach, Virginia*100%
Apex EntertainmentRetailVirginia Beach, Virginia*100%
Broad Creek Shopping CenterRetailNorfolk, Virginia100%
Broadmoor PlazaRetailSouth Bend, Indiana100%
Brooks Crossing Retail (1)
RetailNewport News, Virginia65%
Columbus VillageRetailVirginia Beach, Virginia*100%
Columbus Village IIRetailVirginia Beach, Virginia*100%
Commerce Street RetailRetailVirginia Beach, Virginia*100%
Courthouse 7-ElevenRetailVirginia Beach, Virginia100%
Dimmock SquareRetailColonial Heights, Virginia100%
Fountain Plaza RetailRetailVirginia Beach, Virginia*100%
Greentree Shopping CenterRetailChesapeake, Virginia100%
Hanbury VillageRetailChesapeake, Virginia100%
Harrisonburg RegalRetailHarrisonburg, Virginia100%
Lexington SquareRetailLexington, South Carolina100%
Market at Mill Creek (1)
RetailMount Pleasant, South Carolina70%
Marketplace at HilltopRetailVirginia Beach, Virginia100%
Nexton SquareRetailSummerville, South Carolina100%
North Hampton MarketRetailTaylors, South Carolina100%
North Point CenterRetailDurham, North Carolina100%
Oakland MarketplaceRetailOakland, Tennessee100%
Parkway CentreRetailMoultrie, Georgia100%
Parkway MarketplaceRetailVirginia Beach, Virginia100%
Property    Segment Location Ownership Interest 
4525 Main Street Office Virginia Beach, Virginia* 100% 
Armada Hoffler Tower Office Virginia Beach, Virginia* 100% 
One Columbus Office Virginia Beach, Virginia* 100% 
Two Columbus Office Virginia Beach, Virginia* 100% 
249 Central Park Retail Retail Virginia Beach, Virginia* 100% 
Alexander Pointe Retail Salisbury, North Carolina 100% 
Bermuda Crossroads Retail Chester, Virginia 100% 
Broad Creek Shopping Center Retail Norfolk, Virginia 100% 
Broadmoor Plaza Retail South Bend, Indiana 100% 
Brooks Crossing Retail Newport News, Virginia 65%(1)
Columbus Village Retail Virginia Beach, Virginia* 100% 
Columbus Village II Retail Virginia Beach, Virginia* 100% 
Commerce Street Retail Retail Virginia Beach, Virginia* 100% 
Courthouse 7-Eleven Retail Virginia Beach, Virginia 100% 
Dick’s at Town Center Retail Virginia Beach, Virginia* 100% 
Dimmock Square Retail Colonial Heights, Virginia 100% 
Fountain Plaza Retail Retail Virginia Beach, Virginia* 100% 
Gainsborough Square Retail Chesapeake, Virginia 100% 
Greentree Shopping Center Retail Chesapeake, Virginia 100% 
Hanbury Village Retail Chesapeake, Virginia 100% 
Harper Hill Commons Retail Winston-Salem, North Carolina 100% 
Harrisonburg Regal Retail Harrisonburg, Virginia 100% 
Lightfoot Marketplace Retail Williamsburg, Virginia 70%(2)
North Hampton Market Retail Taylors, South Carolina 100% 
North Point Center Retail Durham, North Carolina 100% 
Oakland Marketplace Retail Oakland, Tennessee 100% 
Parkway Marketplace Retail Virginia Beach, Virginia 100% 
Patterson Place Retail Durham, North Carolina 100% 
Perry Hall Marketplace Retail Perry Hall, Maryland 100% 
Providence Plaza Retail Charlotte, North Carolina 100% 
Renaissance Square Retail Davidson, North Carolina 100% 
Sandbridge Commons Retail Virginia Beach, Virginia 100% 
Socastee Commons Retail Myrtle Beach, South Carolina 100% 
Southgate Square Retail Colonial Heights, Virginia 100% 
Southshore Shops Retail Chesterfield, Virginia 100% 
South Retail Retail Virginia Beach, Virginia* 100% 
South Square Retail Durham, North Carolina 100% 
Stone House Square Retail Hagerstown, Maryland 100% 
Studio 56 Retail Retail Virginia Beach, Virginia* 100% 
Tyre Neck Harris Teeter Retail Portsmouth, Virginia 100% 
Waynesboro Commons Retail Waynesboro, Virginia 100% 
Wendover Village Retail Greensboro, North Carolina 100% 
Encore Apartments Multifamily Virginia Beach, Virginia* 100% 
Johns Hopkins Village Multifamily Baltimore, Maryland 100% 
Liberty Apartments Multifamily Newport News, Virginia 100% 
Smith’s Landing Multifamily Blacksburg, Virginia 100% 
The Cosmopolitan Multifamily Virginia Beach, Virginia* 100% 
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PropertySegmentLocationOwnership Interest
Patterson PlaceRetailDurham, North Carolina100%
Perry Hall MarketplaceRetailPerry Hall, Maryland100%
Providence PlazaRetailCharlotte, North Carolina100%
Red Mill CommonsRetailVirginia Beach, Virginia100%
Sandbridge CommonsRetailVirginia Beach, Virginia100%
Socastee CommonsRetailMyrtle Beach, South Carolina100%
South RetailRetailVirginia Beach, Virginia*100%
South SquareRetailDurham, North Carolina100%
Southgate SquareRetailColonial Heights, Virginia100%
Southshore ShopsRetailChesterfield, Virginia100%
Studio 56 RetailRetailVirginia Beach, Virginia*100%
Tyre Neck Harris TeeterRetailPortsmouth, Virginia100%
Wendover VillageRetailGreensboro, North Carolina100%
1405 PointMultifamilyBaltimore, Maryland100%
Edison ApartmentsMultifamilyRichmond, VA100%
Encore ApartmentsMultifamilyVirginia Beach, Virginia*100%
Greenside ApartmentsMultifamilyCharlotte, North Carolina100%
Hoffler PlaceMultifamilyCharleston, South Carolina93%
Johns Hopkins VillageMultifamilyBaltimore, Maryland100%
Liberty ApartmentsMultifamilyNewport News, Virginia100%
Premier ApartmentsMultifamilyVirginia Beach, Virginia*100%
Smith’s LandingMultifamilyBlacksburg, Virginia100%
Summit PlaceMultifamilyCharleston, South Carolina90%
The CosmopolitanMultifamilyVirginia Beach, Virginia*100%
The Residences at Annapolis Junction (1)
MultifamilyAnnapolis Junction, MD79%

* Located in the Town Center of Virginia Beach
(1) The Company is entitled to a preferred return of 8% on its investment in Brooks Crossing.this property.
(2)    The Company is entitled to a preferred return
As of 9% on its investment in Lightfoot Marketplace.December 31, 2020, the following properties were under development, redevelopment or not yet stabilized:
PropertySegmentLocationOwnership Interest
Wills WharfOfficeBaltimore, Maryland100%
Premier RetailRetailVirginia Beach, Virginia*100%
Solis GainesvilleMultifamilyGainesville, Georgia95%

* Located in the Town Center of Virginia Beach


As of December 31, 2017, the following properties were under development or construction:2.    Significant Accounting Policies
Property    Segment    Location Ownership Interest 
Town Center Phase VI Mixed-use Virginia Beach, Virginia* 100% 
Harding Place Multifamily Charlotte, North Carolina 80%(1)
595 King Street Multifamily Charleston, South Carolina 92.5% 
530 Meeting Street Multifamily Charleston, South Carolina 90% 
Brooks Crossing Office Newport News, Virginia 65%(2)
*Located in the Town Center of Virginia Beach
(1) The Company is entitled to a preferred return of 9% on a portion of its investment in Harding Place.
(2) The Company is entitled to a preferred return of 8% on its investment in Brooks Crossing.

2.Significant Accounting Policies
 
Basis of Presentation
 
The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”("GAAP").
 
The consolidated financial statements include the financial position and results of operations of the Company, the Operating Partnership, its wholly owned subsidiaries, and any interests in variable interest entities ("VIEs") where the Company has been determined to be the primary beneficiary. All significant intercompany transactions and balances have been eliminated in consolidation.
 
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Use of Estimates
 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed. Such estimates are based on management’s historical experience and best judgment after considering past, current, and expected events and economic conditions. Actual results could differ from management’s estimates.
 
Segments
 
Segment information is prepared on the same basis that management reviews information for operational decision-making purposes. Management evaluates the performance of each of the Company’s properties individually and aggregates such properties into segments based on their economic characteristics and classes of tenants. The Company operates in four4 business segments: (i) office real estate, (ii) retail real estate, (iii) multifamily residential real estate, and (iv) general contracting and real estate services. The Company’s general contracting and real estate services business develops and builds properties for its own account and also provides construction and development services to both related and third parties.

Reclassifications

Certain amounts previously reported in the consolidated financial statements have been reclassified in the accompanying consolidated financial statements to conform to the current period's presentation.

Revenue Recognition
 
Rental Revenues
 
The Company leases its properties under operating leases and recognizes base rents when earned on a straight-line basis over the lease term. Rental revenues include $1.2$5.9 million, $1.1$3.4 million and $1.9$2.7 million of straight-line rent adjustments for the years ended December 31, 2017, 2016,2020, 2019, and 2015,2018, respectively. The Company begins recognizing rental revenue when the tenant has the right to take possession of or controls the physical use of the property under lease. The extended collection period for accrued straight-line rental revenue along with the Company’s evaluation of tenant credit risk may result in the nonrecognition of all or a portion of straight-line rental revenue until the collection of substantially all such revenue for a tenant is reasonably assured.probable. The Company recognizes contingent rental revenue (e.g., percentage rents based on tenant sales thresholds) when the sales thresholds are met. Contingent rents included in rental revenues were $0.4 million, $0.4 million, and $0.5 million for the years ended December 31, 2017, 2016, and 2015, respectively. The Company recognizes leasing incentives as reductions to rental revenue on a straight-line basis over the lease term. Leasing incentive amortization was $0.8$0.7 million for each of the years ended December 31, 2017, 2016,2020, 2019, and

2015. 2018. The Company recognizes fair value adjustments recorded at the time of lease assumption in rental income on a straight line basis as a reduction to revenue over the remaining life of the lease or any renewal periods for which the Company determines have value at the time of acquisition. The Company recognizes cost reimbursement revenue for real estate taxes, operating expenses, and common area maintenance costs on an accrual basis during the periods in which the expenses are incurred. The Company recognizes lease termination fees either upon termination or amortizes them over any remaining lease term. 
 
General Contracting and Real Estate Services Revenues

The Company recognizes general contracting revenues as a customer obtains control of promised goods or services in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. For each construction contract, the Company identifies the performance obligations, which typically include the delivery of a single building constructed according to the specifications of the contract. The Company estimates the total transaction price, which generally includes a fixed contract price and may also include variable components such as early completion bonuses, liquidated damages, or cost savings to be shared with the customer. Variable components of the contract price are included in the transaction price to the extent that it is probable that a significant reversal of revenue on construction contractswill not occur. The Company recognizes the estimated transaction price as revenue as it satisfies its performance obligations; the Company estimates its progress in satisfying performance obligations for each contract using the percentage-of-completion method. Under thisinput method, the Company recognizes revenue and an estimated profit as construction contract costs are incurred based on the proportion of incurred costs relative to total estimated construction contract costs at completion. Construction contract costs include all direct material, direct labor, and subcontract costs, as well as any indirectand overhead costs directly related to contract performance. Provisions for estimated losses on uncompleted contracts are recognized immediately in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, are all significant judgments that may result in revisions to costs and income and are recognized in the period in which they are determined. Profit incentivesAdditionally, the estimated costs at completion are includedaffected by management’s forecasts of anticipated costs to be
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incurred and contingency reserves for exposures related to unknown costs, such as design deficiencies and subcontractor defaults. The estimated variable consideration is also affected by claims and unapproved change orders, which may result from changes in revenuesthe scope of the contract. Provisions for estimated losses on uncompleted contracts are recognized immediately in the period in which such losses are determined. The Company defers precontract costs when such costs are directly associated with specific anticipated contracts and their realizationrecovery is probable and when they can be reasonably estimated. probable.

The Company recognizes real estate services revenues from property development and management when realized and earned, generally as such services are provided. Multipleit satisfies its performance obligations under these service arrangements.

The Company assesses whether multiple contracts with a single counterparty are notmay be combined into a single contract for the revenue recognition purposes.purposes based on factors such as the timing of the negotiation and execution of the contracts and whether the economic substance of the contracts was contemplated separately or in tandem.
 
Real Estate Investments
 
Income producing property primarily includes land, buildings, and tenant improvements and is stated at cost. Real estate investments held for development include land and capitalized development costs.land. The Company reclassifies real estate investments held for development to construction in progress upon commencement of construction. Construction in progress is stated at cost. Direct and certain indirect costs clearly associated with the development, redevelopment, construction, leasing, or expansion of real estate assets are capitalized as a cost of the property. Repairs and maintenance costs are expensed as incurred.
 
The Company capitalizes direct and indirect project costs associated with the initial development of a property until the property is substantially complete and ready for its intended use. Capitalized project costs include preacquisition, development, and preconstruction costs including overhead, salaries, and related costs of personnel directly involved, real estate taxes, insurance, utilities, ground rent, and interest. Interest capitalized during the years ended December 31, 2017, 2016,2020, 2019, and 20152018 was $1.3$3.6 million, $1.0$5.9 million and $1.0$5.0 million, respectively. Overhead, salaries and related personnel costs capitalized during the years ended December 31, 2017, 2016,2020, 2019, and 20152018 were $2.4$2.6 million, $1.7$3.1 million and $2.1$3.1 million, respectively.
 
The Company capitalizes preacquisition developmentpredevelopment costs directly identifiable with specific properties when the acquisitiondevelopment of such properties is probable. Capitalized preacquisition developmentpredevelopment costs are presented within other assets in the consolidated balance sheets. Land for which development activities have not yet commenced are presented separately as land held for development in the consolidated balance sheets. Capitalized preacquisition developmentpredevelopment costs as of December 31, 20172020 and 20162019 were $1.4$15.4 million and $1.1$6.5 million, respectively. Costs attributable to unsuccessful projects are expensed.
 
The Company recognizes real estate development grants from state and local governments as reductions to the carrying amounts of the related real estate investments when any attached conditions are satisfied and when there is reasonable assurance that the grant will be received.

Income producing property is depreciated on a straight-line basis over the following estimated useful lives:
Buildings39 years
Capital improvements15—5—20 years
Equipment5—153—7 years
Tenant improvementsTerm of the related lease
(or estimated useful life, if shorter)
 
Operating Property Acquisitions
 
Acquisitions of operating properties have been and will generally be accounted for as acquisitions of a group of assets, with costs incurred to effect an acquisition, including title, legal, accounting, brokerage commissions, and other related costs, being capitalized as part of the cost of the assets acquired. In connection with operating propertysuch acquisitions, the Company identifies and recognizes all assets acquired and liabilities assumed at their estimated fair values or relative fair values subsequent to the adoption of the new accounting guidance discussed below, as of the acquisition date. The purchase price allocations to tangible assets, such as land, site improvements, and buildings and improvements are presented within income producing property in the consolidated balance sheets and depreciated over their estimated useful lives. Acquired lease intangiblesintangible assets are presented within otheras a separate component of assets andon the consolidated balance sheets. Acquired lease intangible liabilities are presented within other liabilities in the consolidated balance sheets and amortized over their respective lease terms.sheets. The Company amortizes in-place lease assets as depreciation and amortization expense on a straight-line basis over the remaining term of the related leases. The Company amortizes above-market lease assets as reductions to rental revenues on a straight-line basis over the remaining term of the related leases. The Company amortizes below-market lease liabilities as increases to rental revenues on a straight-line basis over the remaining term
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of the related leases. The Company amortizes below-market ground lease assets as increases to rental expenses on a straight-line basis over the remaining term of the related leases. Prior to October 1, 2016, the Company expensed all costs incurred related to operating property acquisitions. On October 1, 2016, the Company adopted newly issued accounting guidance that allows capitalization of costs related to operating property acquisitions that do not meet the definition of a business under the new guidance discussed below under "Recent Accounting Pronouncements".
 
The Company values land based on a market approach, looking to recent sales of similar properties, adjusting for differences due to location, the state of entitlement, as well as the shape and size of the parcel. Improvements to land are valued using a replacement cost approach. The approach applies industry standard replacement costs adjusted for geographic specific considerations and reduced by estimated depreciation. The value of buildings acquired is estimated using the replacement cost approach, assuming the buildings were vacant at acquisition. The replacement cost approach considers the composition of the structures acquired, adjusted for an estimate of depreciation. The estimate of depreciation is made considering industry standard information and depreciation curves for the identified asset classes. The value of acquired lease intangibles considers the estimated cost of leasing the properties as if the acquired buildings were vacant, as well as the value of the current leases relative to market-rate leases. The in-place lease value is determined using an estimated total lease-up time and lost rental revenues during such time. The value of current leases relative to market-rate leases is based on market rents obtained for market comparables. Given the significance of unobservable inputs used in the valuation of acquired real estate assets, the Company classifies them as Level 3 inputs in the fair value hierarchy.
 
The Company values debt assumed in connection with operating property acquisitions based on a discounted cash flow analysis of the expected cash flows of the debt. Such analysis considers the contractual terms of the debt, including the period to maturity, credit characteristics, and uses observable market-based inputs, including interest rate information asother terms of the acquisition date. The Company also considers credit valuation adjustments for potential nonperformance risk. The Company classifies the inputs used to value debt assumed in connection with operating property acquisitions asarrangements, which are Level 23 inputs in the fair value hierarchy as they are predominantly observablehierarchy.

Real Estate Sales

The Company accounts for the sale of real estate assets and market-based.any related gain in accordance with the accounting guidance applicable to sales of real estate, which establishes standards for recognition of profit on all real estate sales transactions other than retail land sales. The Company recognizes the sale and associated gain or loss once it transfers control of the real estate asset and the Company does not have significant continuing involvement.

Real Estate Investments Held for Sale
 
Real estate assets classified as held for sale are reported at the lower of their carrying value or their fair value, less estimated costs to sell. Once a property is classified as held for sale, it is no longer depreciated. A property is classified as held for sale when: (i) senior management commits to a plan to sell the property, (ii) the property is available for immediate sale in its present condition, subject only to conditions usual and customary for such sales, (iii) an active program to locate a buyer and other actions required to complete the plan to sell have been initiated, (iv) the sale is expected to be completed within one year, (v) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

No properties were held for sale asAs of December 31, 2017 or 2016.2020, the 7-Eleven outparcel at Hanbury Village and a land parcel adjacent to Nexton Square were classified as held for sale. As of December 31, 2019, a land parcel adjacent to the Market at Mill Creek shopping center was classified as held for sale.

    
Impairment of Long Lived Assets
 
The Company evaluates its real estate assets for impairment on a property by propertyproperty-by-property basis whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If such an evaluation is necessary, the Company compares the carrying amount of any such real estate asset with the undiscounted expected future cash flows that are directly associated with, and that are expected to arise as a direct result of, its use and eventual disposition. If the carrying amount of a real estate asset exceeds the associated estimate of undiscounted expected future cash flows, an impairment loss is recognized to reduce the real estate asset’s carrying value to its fair value. ImpairmentThe impairment charges recognized during the years ended December 31, 2017, 2016,2019 and 20152018 represent unamortized leasing or acquired intangible assets related to vacated tenants.  The impairment charges recognized during the year ended December 31, 2018 primarily relate to the $1.5 million impairment of Waynesboro Commons.
 
Interest Income
Interest income on notes receivable is accrued based on the contractual terms of the loans and when it is deemed
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collectible. Many loans provide for accrual of interest and fees that will not be paid until maturity of the loan. Interest is recognized on these loans at the accrual rate subject to the determination that accrued interest and fees are ultimately collectible, based on the underlying collateral and the status of development activities, as applicable. If this determination cannot be made, recognition of interest income may be fully or partially deferred until it is ultimately paid.

Cash and Cash Equivalents
 
Cash and cash equivalents include demand deposits, investments in money market funds, and investments with an original maturity of three months or less.


Restricted Cash
 
Restricted cash represents amounts held by lenders for real estate taxes, insurance, and reserves for capital improvements. The Company presents changes in cash restricted for real estate taxes and insurance as operating activities in the consolidated statements of cash flows. The Company presents changes in cash restricted for capital improvements as investing activities in the consolidated statements of cash flows. 
 
Accounts Receivable, net
 
Accounts receivable include amounts from tenants for base rents, contingent rents, and cost reimbursements as well as accrued straight-line rental revenue. As of December 31, 20172020 and 2016,2019, accrued straight-line rental revenue presented within accounts receivable in the consolidated balance sheets was $12.8$21.3 million and $12.3$17.9 million, respectively.
 
The Company’s evaluation of the collectability of accounts receivable and the adequacy of the allowance for doubtful accounts is based primarily upon evaluations of individual receivables, current economic conditions, historical experience, and other relevant factors. The Company establishes reservesa reserve for the receivables associated with a tenant receivables outstanding over 90 days. Forwhen collection of substantially all such tenants, the Company also reserves any related accrued straight-line rental revenue. Additional reserves are recordedoperating lease payments for more current amounts, as applicable, when the Company has determined collectability to be doubtful.a tenant is not probable. As of December 31, 20172020 and 2016,2019, the allowance for doubtful accounts was $0.5$1.7 million and $0.4$0.3 million, respectively. The Company presents bad debt expense withinreflects these amounts as a component of rental expenses inincome on the consolidated statements of comprehensive income. 
 
Notes Receivable and Allowance for Loan Losses
 
Notes receivable primarily represent financing to third parties in the form of mortgage or mezzanine loans for the development of new real estate. The Company's mezzanine loans are typically made to borrowers who have little or no equity in the underlying development projects. Mezzanine loans are secured, in part, by pledges of ownership interests of the entities that own the underlying real estate. The loans generally have junior liens on the respective real estate projects.

The Company’s allowance for loan losses on notes receivable is evaluated using risk ratings that correspond to probabilities of default and loss given default. Risk ratings are determined for each loan after consideration of progress of development activities, including leasing activities, projected development costs, and current and projected mezzanine and senior loan balances. The Company's risk ratings are as follows:

•Pass: loans in this category are adequately collateralized by a development project with conditions materially consistent with the Company's underwriting assumptions.
•Special Mention: loans in this category show signs that the economic performance of the project may suffer as a result of slower-than-expected leasing activity or an extended development or marketing timeline. Loans in this category warrant increased monitoring by management.
•Substandard: loans in this category may not be fully collected by the Company evaluatesunless remediation actions are taken. Remediation actions may include obtaining additional collateral or assisting the collectability of bothborrower with asset management activities to prepare the project for sale. The Company will also consider placing the loan on nonaccrual status if it does not believe that additional interest on and principalaccruals will ultimately be collected.

At the end of each reporting period, the Company measures expected credit losses to be incurred over the remaining contractual term based on the risk rating of its notes receivable based primarily upon the financial condition of the individual borrowers. Aeach loan. If a loan is determined to be impaired when, based upon current information, it is no longer probable thatrated as Substandard, the Company will be able to collect all contractual amounts due from the borrower. The amount of impairment loss recognized is measuredthen estimates expected credit losses as the difference between the carrying amountamortized cost basis of the outstanding loan and the estimated projected sales proceeds of the underlying collateral. Changes to the allowance for loan losses resulting from quarterly evaluations are recorded through provision for unrealized credit losses on the Consolidated Statements of Comprehensive Income.

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Guarantees
The Company measures and records a liability for the fair value of its guarantees on a nonrecurring basis upon issuance using Level 3 internally-developed inputs. These guarantees typically relate to payments that could be required of the Company to senior lenders on its mezzanine loan investments. The Company bases its estimated realizable value.fair value on the market approach, which compares the guarantee terms and credit characteristics of the underlying development project to other projects for which guarantee pricing terms are available. The offsetting entry for the guarantee liability is a premium on the related loan receivable. The liability is amortized on a straight-line basis over the remaining term of the loan. On a quarterly basis, the Company assesses the likelihood of a contingent liability in connection with these guarantees and will record an additional guarantee liability if the unamortized guarantee liability is insufficient.
 
Leasing Costs
 
Commissions paid by the Company to third parties to originate a lease are deferred and amortized as depreciation and amortization expense on a straight-line basis over the term of the related lease. Leasing costs are presented within other assets in the consolidated balance sheets.
 

Leasing Incentives
 
Incentives paid by the Company to tenants are deferred and amortized as reductions to rental revenues on a straight-line basis over the term of the related lease. Leasing incentives are presented within other assets in the consolidated balance sheets.
 
Debt Issuance Costs
 
Financing costs are deferred and amortized as interest expense using the effective interest method over the term of the related debt. Debt issuance costs are presented as a direct deduction from the carrying value of the associated debt liability in the consolidated balance sheets.
 
Derivative Financial Instruments
 
The Company may enter into interest rate derivatives to manage exposure to interest rate risks. The Company does not use derivative financial instruments for trading or speculative purposes. The Company recognizes derivative financial instruments at fair value and presents them within other assets and liabilities in the consolidated balance sheets. Gains and losses resulting from changes in the fair value of derivatives that are neither designated nor qualify as hedging instruments are recognized within the change in fair value of interest rate derivatives caption in the consolidated statements of comprehensive income. For derivatives that qualify as cash flow hedges, the effective portion of the gain or loss is reported as a component of other comprehensive income (loss) and reclassified into earnings in the periods during which the hedged forecasted transaction affects earnings.    
 
Stock-Based Compensation
 
The Company measures the compensation cost of restricted stock awards based on the grant date fair value. The Company recognizes compensation cost for the vesting of restricted stock awards using the accelerated attribution method. Compensation cost associated with the vesting of restricted stock awards is presented within either general and administrative expenses or general contracting and real estate services expenses in the consolidated statements of comprehensive income. Total stock-based compensation expense recognized during the years ended December 31, 2017, 2016, and 2015 was $1.3 million, $1.1 million and $0.9 million, respectively. Stock-based compensation for personnel directly involved in the construction and development of a property is capitalized. During the years ended December 31, 2017, 2016, and 2015, the Company capitalized $0.4 million, 0.3 million, and $0.4 million, respectively, of stock-based compensation. The effect of forfeitures of awards is recorded as they occur. 
 
Income Taxes
 
The Company has elected to be taxed as a REIT for U.S. federal income tax purposes. For continued qualification as a REIT for federal income tax purposes, the Company must meet certain organizational and operational requirements, including a requirement to pay distributions to stockholders of at least 90% of annual taxable income, excluding net capital gains. As a REIT, the Company generally is not subject to income tax on net income distributed as dividends to stockholders. The Company is subject to state and local income taxes in some jurisdictions and, in certain circumstances, may also be subject to federal excise taxes on undistributed income. In addition, certain of the Company’s activities must be conducted by subsidiaries that have elected to be treated as a taxable REIT subsidiary (“TRS”
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("TRS") subject to both federal and state income taxes. The Operating Partnership conducts its development and construction businesses through the TRS. The related income tax provision or benefit attributable to the profits or losses of the TRS and any taxable income of the Company is reflected in the consolidated financial statements.
 
The Company uses the liability method of accounting for deferred income tax in accordance with GAAP. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the carrying value of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the statutory rates expected to be applied in the periods in which those temporary differences are settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period of the change. A valuation allowance is recorded on the Company’s deferred tax assets when it is more likely than not that such assets will not be realized. When evaluating the realizability of the Company’s deferred tax assets, all evidence, both positive and negative, is evaluated. Items considered in this analysis include the ability to carrybackcarry back losses, the reversal of temporary differences, tax planning strategies, and expectations of future earnings.  
 

Under GAAP, the amount of tax benefit to be recognized is the amount of benefit that is more likely than not to be sustained upon examination. Management analyzes its tax filing positions in the U.S. federal, state and local jurisdictions where it is required to file income tax returns for all open tax years. If, based on this analysis, management determines that uncertainties in tax positions exist, a liability is established. The Company recognizes accrued interest and penalties related to unrecognized tax positions in the provision for income taxes. If recognized, the entire amount of unrecognized tax positions would be recorded as a reduction to the provision for income taxes.
 
Discontinued Operations
 
Disposals representing a strategic shift that has or will have a major effect on the Company’s operations and financial results are reported as discontinued operations.
 
Net Income Per Share and Unit
 
The Company calculates net income per share and unit based upon the weighted average shares and units outstanding. Diluted net income per share and unit is calculated after giving effect to all significant potential dilutive shares outstanding during the period. Potential dilutive shares outstanding during the period include nonvested restricted stock awards. However, there were no0 significant potential dilutive shares or units outstanding for each of the three years ended December 31, 2017.2020, 2019, and 2018. As a result, basic and diluted outstanding shares and units were the same for all periodseach period presented. See Note 11 for the changes in the Company’s nonvested restricted awards during each of the three years ended December 31, 2017.    

Emerging Growth Company StatusRecent Accounting Pronouncements

The Company currently qualifies as an emerging growth company (“EGC”) pursuant to the Jumpstart Our Business Startups Act and will lose this qualification on December 31, 2018, which is the last day of the fiscal year after the fifth anniversary of the Company's IPO. An EGC may choose to take advantage of the extended private company transition period provided for complying with new or revised accounting standards that may be issued byRecently Issued Accounting Standards Adopted:

Credit losses

In June 2016, the Financial Accounting Standards Board (the “FASB”("FASB") orissued ASU No. 2016-13, Financial Instruments-Credit Losses - Measurement of Credit Losses on Financial Instruments (Topic 326). ASU 2016-13 significantly changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the U.S. Securities"incurred loss" approach under previous guidance with an "expected loss" model for instruments measured at amortized cost, such as the Company's notes receivable, construction receivables, and Exchange Commission (the “SEC”). off-balance sheet credit exposures. The amendment requires entities to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses.

The Company has elected to opt out of such extended transition period. This election is irrevocable. 
Recent Accounting Pronouncements
On May 28, 2014,adopted the FASB issued a new standard that provides a single, comprehensive model for recognizing revenue from contracts with customers. While the new standard does not supersede the guidance on accounting for leases, it will change the way the Company recognizes revenue from construction and development contracts with third party customers. The Company will adopt this standard on January 1, 20182020, using the modified retrospective transition method applying this standardand recorded a noncash cumulative effect adjustment to all contracts not yet completed asrecord a reduction to retained earnings of that date. In applying the standard$3.0 million, $2.8 million of which relates to the Company's future construction contracts, certain pre-contract costs incurred by the Company will be deferredmezzanine loans and amortized over the period during$0.2 million of which construction obligations are fulfilled. Previously, these costs were immediately recorded as general contracting expenses upon commencement of construction, with the corresponding general contracting revenue also recorded. Applying the standardrelates to the Company's uncompleted contracts asconstruction accounts receivable. See Note 6—Notes Receivable and Current Expected Credit Losses, for more information.

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Fair Value Measurements

In August 2018, will not result in a material adjustment to the Company's financial position as of January 1, 2018. Any required adjustment will be recorded as a cumulative catch-up adjustment to stockholders' equity.

On February 25, 2016, the FASB issued a new lease standard that requires lesseesASU 2018-13, Fair Value Measurement - Disclosure Framework—Changes to recognize most leases in their balance sheets as lease liabilities with corresponding right-of-use assets.the Disclosure Requirements for Fair Value Measurement (Topic 820). The new standard also makes targeted changes to lessor accounting. The new standard will be effective for the Company on January 1, 2019 and requires a modified retrospective transition approach for all leases existing at, or entered into after, the beginningASU is part of the earliest comparative period presented, with an optionFASB's disclosure framework project to use certain transition relief. Management is currently evaluatingimprove the potential impacteffectiveness of disclosures in the notes to financial statements by facilitating clear communication of the information required by generally accepted accounting principles. The ASU modifies disclosure requirements on fair value measurements in Topic 820. The Company adopted the new standard on the Company’s consolidated financial statements.
On March 30, 2016, the FASB issued new guidance that changed the accounting for certain aspects of share-based payments to employees. Entities are required to recognize the income tax effects of awards in the income statement when the awards vest or are settled, and the Company is allowed to account for forfeitures as they occur. The Company adopted the guidance on January 1, 2017 and it2020. The adoption of the ASU did not have a material impact on disclosures in the Company’sCompany's consolidated financial statements.



Lease Modification Accounting Q&A

In 2016,April 2020, the FASB staff issued newa question and answer document (the "Lease Modification Q&A") focused on the application of lease accounting guidance that addresses eight classification issues related to lease concessions provided as a result of the statement of cash flows and requiresCOVID-19 pandemic. Under existing lease guidance, the presentation of total changes in cash, cash equivalents, restricted cash, and restricted cash equivalents in the statement of cash flows. The Company adopted this new guidance effective December 31, 2017, applying it retrospectivelywould have to each period presented. The new guidance requires that the statement of cash flows show changes in restricted cash in addition to changes in cash and cash equivalents. No additional changes were required to be made to the Company's consolidated statements of cash flows. The following table sets forth the items from the Company's Consolidated Balance Sheets that are included in cash, cash equivalents, and restricted cash in the consolidated statements of cash flows:
 As of December 31
 2017 2016 2015
Cash and cash equivalents$19,959
 $21,942
 $26,989
Restricted cash2,957
 3,251
 2,824
Cash, cash equivalents, and restricted cash$22,916
 $25,193
 $29,813

The following table summarizes the changes made to net cash provided by operating activities and net cash used in investing activities in consolidated statements of cash flows for the years ended December 31, 2016 and 2015determine, on a retrospectivelease by lease basis, (no changes were made to net cash provided by financing activities):

 Years ended December 31,
 2016 2015
Operating activities as originally presented$59,770
 $33,086
Adjustments219
 180
Operating activities after adjustments$59,989
 $33,266
    
Investing activities as originally presented$(226,461) $(56,381)
Adjustments$208
 $(1,580)
Investing activities after adjustments$(226,253) $(57,961)

On January 5, 2017,if a lease concession was the FASB issued new guidance that modifies the definitionresult of a business. Under this new guidance, many real estate acquisitions will now be considered asset acquisitions, allowing costs associatedarrangement reached with these acquisitionsthe tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows lessors, if certain criteria have been met, to be capitalized.bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. The Company adopted this guidance on October 1, 2016, resulting induring the capitalization of approximately $0.7 million of acquisition costs related to two acquisitions in the fourthsecond quarter of 2016. If2020 and elected to not apply the Company had adopted this guidance on January 1, 2016, approximately $1.4 millionexisting lease modification accounting framework in acquisition costs would have been capitalized.instances where the total payments under a modified lease are substantially the same as or less than the total payments under the existing lease.  

On February 22, 2017,Recently Issued Accounting Standards Not Yet Adopted:

Reference Rate Reform

In March 2020, the FASB issued new guidance that clarifies the scope and application of guidance on sales or transfers of nonfinancial assets and in substance nonfinancial assets to customers, including partial sales. The new guidance applies to all nonfinancial assets, including real estate, and defines an in substance nonfinancial asset. The new guidance is effective for the Company on January 1, 2018. Management does not expect the adoptionASU 2020-04, Reference Rate Reform - Facilitation of the newEffects of Reference Rate Reform on Financial Reporting (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance toin ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company is currently evaluating the effect that adopting this standard may have a material effect on the Company's financial position or results of operations.its Consolidated Financial Statements.


OnEarnings Per Share

In August 28, 2017,2020, the FASB issued new guidance thatASU 2020-06, an update to ASC Topic 470 and ASC Topic 815. ASU 2020-06 simplifies some of the requirements relating to accounting for derivativesconvertible instruments and hedging. The new guidance eliminatesremoves certain settlement conditions that are required for equity contracts to qualify for the requirement to separately measure and report hedge ineffectiveness for a highly effective hedge andderivative scope exception. This ASU also simplifies diluted earnings per share calculation in certain documentationareas and assessment requirements relating to the determination of hedge effectiveness. The new guidance will be effective for the Company on January 1, 2019, with early adoption permitted.provides updated disclosure requirements. The Company does notis currently have any derivatives designated as hedging instruments for accounting purposes. The applicationevaluating the impact of this guidance to future hedging relationships could reduce or eliminate the gains and losses that would otherwise be recorded for these derivative instruments.ASU 2020-06 on its consolidated financial statements.

3.Segments
3.    Segments
 
Net operating income (segment revenues minus segment expenses) is the measure used by the Company’s chief operating decision-maker to assess segment performance. Net operating income is not a measure of operating income or cash flows from operating activities as measured by GAAP and is not indicative of cash available to fund cash

needs. As a result, net operating income should not be considered as an alternative to cash flows as a measure of liquidity. Not all companies calculate net operating income in the same manner. The Company considers net operating income to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of the Company’s real estate and construction businesses. 
 
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Net operating income of the Company’s reportable segments for the years ended December 31, 2017, 2016,2020, 2019, and 20152018 was as follows (in thousands):
 
Years Ended December 31,  Years Ended December 31, 
2017 2016 2015 202020192018
Office real estate              Office real estate            
Rental revenues$19,207
 $20,929
 $31,534
Rental revenues$43,494 $33,269 $20,701 
Rental expenses5,483
 5,560
 6,938
Rental expenses10,799 8,722 5,858 
Real estate taxes1,859
 2,000
 2,950
Real estate taxes5,111 3,471 2,034 
Segment net operating income11,865
 13,369
 21,646
Segment net operating income27,584 21,076 12,809 
Retail real estate     Retail real estate   
Rental revenues63,109
 56,511
 32,064
Rental revenues73,032 77,593 67,959 
Rental expenses10,233
 9,116
 5,915
Rental expenses11,029 11,656 10,903 
Real estate taxes6,176
 5,395
 2,928
Real estate taxes7,784 7,916 6,801 
Segment net operating income46,700
 42,000
 23,221
Segment net operating income54,219 58,021 50,255 
Multifamily residential real estate     Multifamily residential real estate   
Rental revenues26,421
 21,915
 17,574
Rental revenues49,962 40,477 28,298 
Rental expenses9,705
 7,228
 6,351
Rental expenses17,132 13,954 10,461 
Real estate taxes2,494
 2,234
 1,904
Real estate taxes5,241 3,574 2,548 
Segment net operating income14,222
 12,453
 9,319
Segment net operating income27,589 22,949 15,289 
General contracting and real estate services     General contracting and real estate services   
Segment revenues194,034
 159,030
 171,268
Segment revenues217,146 105,859 76,359 
Segment expenses186,590
 153,375
 165,344
Segment expenses209,472 101,538 73,628 
Segment gross profit7,444
 5,655
 5,924
Segment gross profit7,674 4,321 2,731 
Net operating income$80,231
 $73,477
 $60,110
Net operating income$117,066 $106,367 $81,084 
 
Rental expenses represent costs directly associated with the operation and management of the Company’s real estate properties. Rental expenses include asset management fees, property management fees, repairs and maintenance, insurance, and utilities.
 
General contracting and real estate services revenues for the years ended December 31, 2017, 2016,2020, 2019, and 20152018 exclude revenue related to intercompany construction contracts of $51.5$26.6 million, $43.3$99.9 million and $43.1$134.4 million, respectively, as it is eliminated in consolidation. General contracting and real estate services expenses for the years ended December 31, 2017, 2016,2020, 2019, and 20152018 exclude expenses related to intercompany construction contracts of $51.0$26.3 million, $42.7$99.0 million and $42.8$133.4 million, respectively, as it is eliminated in consolidation. General contracting and real estate services expenses for the years ended December 31, 2017, 2016, and 2015 include noncash stock compensation expense
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Table of $0.3 million, $0.2 million, and $0.2 million, respectively.Contents


The following table reconciles net operating income to net income for the years ended December 31, 2017, 2016,2020, 2019, and 20152018 (in thousands):
 
Years Ended December 31,  Years Ended December 31, 
2017 2016 2015 202020192018
Net operating income$80,231
 $73,477
 $60,110
Net operating income$117,066 $106,367 $81,084 
Depreciation and amortization(37,321) (35,328) (23,153)Depreciation and amortization(59,972)(54,564)(39,913)
Amortization of right-of-use assets - finance leasesAmortization of right-of-use assets - finance leases(586)(377)0 
General and administrative expenses(10,435) (9,552) (8,397)General and administrative expenses(12,905)(12,392)(11,431)
Acquisition, development and other pursuit costs(648) (1,563) (1,935)Acquisition, development and other pursuit costs(584)(844)(352)
Impairment charges(110) (355) (41)Impairment charges(666)(252)(1,619)
Gain on real estate dispositionsGain on real estate dispositions6,388 4,699 4,254 
Interest income7,077
 3,228
 126
Interest income19,841 23,215 10,729 
Interest expense(17,439) (16,466) (13,333)
Loss on extinguishment of debt(50) (82) (512)
Gain on real estate dispositions8,087
 30,533
 18,394
Change in fair value of interest rate derivatives1,127
 (941) (229)
Other income131
 147
 119
Income tax benefit (provision)(725) (343) 34
Interest expense on indebtednessInterest expense on indebtedness(30,120)(30,776)(19,087)
Interest expense on finance leasesInterest expense on finance leases(915)(568)0 
Equity in income of unconsolidated real estate entitiesEquity in income of unconsolidated real estate entities0 273 372 
Change in fair value of derivatives and otherChange in fair value of derivatives and other(1,130)(3,599)(951)
Provision for unrealized credit lossesProvision for unrealized credit losses(256)0 0 
Other income (expense), netOther income (expense), net515 585 377 
Income tax benefitIncome tax benefit283 491 29 
Net income$29,925
 $42,755
 $31,183
Net income$36,959 $32,258 $23,492 
 
General and administrative expenses represent costs not directly associated with the operation and management of the Company’s real estate properties and general contracting and real estate services businesses. General and administrative expenses include corporate office personnel salaries and benefits, bank fees, accounting fees, legal fees, and other corporate office expenses. General
4.    Leases

Lessee Disclosures

As a lessee, the Company has 8 ground leases on 7 properties with initial terms that ranged from 5 to 61 years and administrative expensesoptions to extend up to an additional 70 years in certain cases. The exercise of lease renewal options is at the Company's sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term. NaN of these leases have been classified as operating leases and 2 of these leases have been classified as finance leases. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.

The components of lease cost for the years ended December 31, 2017, 2016,2020, 2019, and 2015 include noncash stock compensation expense2018 were as follows (in thousands):
 Years Ended December 31, 
 20202019
2018 (b)
Operating lease cost$1,660 $2,700 $2,962 
Finance lease cost:
Amortization of right-of-use assets (a)
586 369 0 
Interest on lease liabilities915 568 0 

(a) Includes amortization of $0.9 million, $0.7 million and $0.7 million, respectively.below-market ground lease intangible assets.
(b) All of the Company's leases were classified as operating leases prior to 2019.
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4.Operating Leases

The Company’s commercialtable below presents supplemental cash flow information related to leases during the years ended December 31, 2020, 2019, and 2018 (in thousands):
 Years Ended December 31, 
 20202019
2018 (a)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$2,113 $1,969 $2,354 
Operating cash flows from finance leases864 533 0 

(a) All of the Company's leases were classified as operating leases prior to 2019.


Additional information related to leases as of December 31, 2020 and 2019 were as follows:
 December 31, 
 20202019
Weighted Average Remaining Lease Term (years)
Operating leases44.545.4
Finance leases40.241.2
Weighted Average Discount Rate
Operating leases5.4 %5.4 %
Finance leases5.2 %5.2 %

The undiscounted cash flows to be paid on an annual basis for the next five years and thereafter are presented below. The total amount of lease payments, on an undiscounted basis, are reconciled to the lease liability, on the consolidated balance sheet by considering the present value discount.
Year Ending December 31,Operating LeasesFinance Leases
(in thousands)
2021$2,158 $864 
20222,361 868 
20232,400 873 
20242,436 888 
20252,452 925 
Thereafter101,072 42,089 
Total undiscounted cash flows112,879 46,507 
Present value discount(71,220)(28,553)
Discounted cash flows$41,659 $17,954 

Lessor Disclosures

As a lessor, the Company leases its properties under operating leases and recognizes base rents on a straight-line basis over the lease term. The Company also recognizes revenue from tenant recoveries, through which tenants reimburse the Company on an accrual basis for certain expenses such as utilities, janitorial services, repairs and maintenance, security and alarms, parking lot and ground maintenance, administrative services, management fees, insurance, and real estate taxes. Rental revenues are reduced by the amount of any leasing incentives amortized on a straight-line basis over the term of the applicable lease. In addition, the Company recognizes contingent rental revenue (e.g., percentage rents based on tenant sales thresholds) when the sales thresholds are met. Many tenant leases generally rangeinclude 1 or more options to renew, with renewal terms that can extend the lease term from fiveone to 2015 years but certain leases with anchor tenants may be longer.or more. The Company’sexercise of lease renewal options is at the tenant's sole discretion. The Company includes a renewal period in the lease term only if it appears at lease inception that the renewal is reasonably certain.

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Rental revenue for the years ended December 31, 2020, 2019, and 2018 comprised the following (in thousands):
Years Ended December 31, 
 202020192018
Base rent and tenant charges$159,747 $147,309 $114,012 
Accrued straight-line rental adjustment5,927 3,402 2,731 
Lease incentive amortization(693)(739)(732)
Below/(above) market lease amortization1,507 1,367 947 
Total rental revenue$166,488 $151,339 $116,958 

The Company's commercial tenant leases provide for minimum rental payments during each of the next five years and thereafter as follows (in thousands):
Year Ending December 31,Operating Leases
2021$90,693 
202288,270 
202381,767 
202473,029 
202560,588 
Thereafter307,377 
Total$701,724 

5.    Real Estate Investments and Equity Method Investment
2018$71,439
201964,204
202054,582
202148,018
202241,441
Thereafter184,844
Total$464,528
Lease terms on multifamily apartment units generally range from seven to 15 months, with a majority having 12-month lease terms. Apartment leases are not included in the preceding table as the remaining terms as of December 31, 2017 are generally less than one year. 

5.Real Estate Investments and Equity Method Investments
 
The Company’s real estate investments comprised the following as of December 31, 20172020 and 20162019 (in thousands):
 
December 31, 2017 December 31, 2020
Income
producing
property
 
Held
for
development
 
Construction
in
progress
 Total Income producing propertyHeld for developmentConstruction in progressTotal
Land$175,885
 $680
 $21,212
 $197,777
Land$261,984 $13,607 $5,200 $280,791 
Land improvements44,681
 —
 —
 44,681
Land improvements61,275 0 0 61,275 
Buildings and improvements690,120
 —
 —
 690,120
Buildings and improvements1,357,684 0 0 1,357,684 
Development and construction costs—
 —
 61,859
 61,859
Development and construction costs0 0 58,167 58,167 
Real estate investments$910,686
 $680
 $83,071
 $994,437
Real estate investments$1,680,943 $13,607 $63,367 $1,757,917 
 
December 31, 2016 December 31, 2019
Income
producing
property		 Held
for
development		 Construction
in
progress		 Total Income producing propertyHeld for developmentConstruction in progressTotal
Land$171,733
 $680
 $6,880
 $179,293
Land$263,258 $5,000 $7,265 $275,523 
Land improvements45,052
 —
 —
 45,052
Land improvements58,636 0 0 58,636 
Buildings and improvements677,293
 —
 —
 677,293
Buildings and improvements1,138,829 0 0 1,138,829 
Development and construction costs—
 —
 6,649
 6,649
Development and construction costs0 0 133,336 133,336 
Real estate investments$894,078
 $680
 $13,529
 $908,287
Real estate investments$1,460,723 $5,000 $140,601 $1,606,324 
 
20172020 Operating Property AcquisitionAcquisitions


In June 2020, the Company exercised its option to purchase the remaining 21.0% ownership interest in 1405 Point in exchange for increased ground lease payments to be made over the approximately 42-year remaining lease term. The Company recorded a note payable of $6.1 million, which represents the present value of these payments. The ground lessor is an affiliate of our former joint venture partner.

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On July 25, 2017,September 22, 2020, the Company exercised its option to purchase Nexton Square for $17.9 million cash and the assumption of a note payable of $22.9 million. The Company also incurred capitalized acquisition costs of $0.2 million. The developer of this property repaid the Company's mezzanine note receivable of $16.4 million at the time of the acquisition.

On October 1, 2020, the Company acquired Edison Apartments, a multifamily property located in downtown Richmond, Virginia, for consideration comprised of 633,734 Class A Units (as defined below), the assumption of a $16.4 million loan payable, and the assumption of $1.1 million in other assets and liabilities. The seller of the property was a partnership that includes several members from the Company's management team and board of directors.

On October 30, 2020, the Company acquired 79.0% of the partnership that owns The Residences at Annapolis Junction. As part of this purchase, the Company extinguished its note receivable for this project and made a cash payment of $0.2 million. The Company assumed an $83.4 million senior loan as part of this acquisition, which was immediately refinanced with a new $84.4 million loan. This refinanced loan bears interest at a rate of the Secured Overnight Financing Rate ("SOFR") plus a margin of 2.66% and matures on November 1, 2030. As part of this financing transaction, the partnership also purchased an interest rate cap for $0.1 million with a SOFR strike rate of 1.84%, which expires on November 1, 2023. Due to a preferred return that we receive on this investment, no value was assigned to our partner's investment in this property at the time of the acquisition.

The following table summarizes the purchase price allocation (including acquisition costs) based on the relative fair value of the assets acquired and intangible liabilities assumed for the 3 operating properties acquired during the year ended December 31, 2020 (in thousands):
Nexton SquareEdison ApartmentsThe Residences at Annapolis Junction
Land$9,885 $3,428 $14,774 
Site improvements3,690 0 1,786 
Building and improvements24,070 18,227 101,219 
Furniture and fixtures0 0355 01,796 
In-place leases5,239 1,882 4,079 
Below-market leases(1,877)(140)0 
Fair value adjustment on acquired debt364 (6)0 
Net assets acquired$41,371 $23,746 $123,654 

2019 Operating Property Acquisitions

On February 6, 2019, the Company acquired an additional outparcel phase of Wendover Village in Greensboro, North Carolina for a contract price of $14.3$2.7 million plus capitalized acquisition costs of $0.1 million. The following table summarizesThis outparcel is leased to a single tenant.

On March 14, 2019, the purchase price allocation, including acquisition costs,Company acquired the office and retail portions of the One City Center project in Durham, North Carolina in exchange for this property (in thousands):

Land$5,550
Site improvements232
Building and improvements6,977
In-place leases1,382
Above-market leases327
Below-market leases(50)
Net assets acquired$14,418

Rental revenues and net income froma redemption of its 37% equity ownership in the ourparcel phasejoint venture with Austin Lawrence Partners, which totaled $23.0 million as of Wendover Village for the period from the acquisition date, to December 31, 2017 included in the consolidated statementand a cash payment of comprehensive income were $0.6 million and $0.2 million, respectively.


2016 Operating Property Acquisitions
On January 14, 2016, the$23.2 million. The Company completed thealso incurred capitalized acquisition costs of an 11-property retail portfolio totaling 1.1 million square feet for $170.5$0.1 million.


On April 29, 2016,24, 2019, the Company completedexercised its option to purchase 79% of the interests in the partnership that owns 1405 Point in exchange for extinguishing the Company's $31.3 million note receivable on the project, making a cash payment of $0.3 million, and assuming a loan payable of $64.9 million, which was recorded at its fair value of $65.8 million. The Company also incurred capitalized acquisition costs of Southgate Square, a 220,000 square foot retail center located in Colonial Heights, Virginia,$0.1 million.

On May 23, 2019, the Company acquired Red Mill Commons and Marketplace at Hilltop from Venture Realty Group for aggregate consideration of $39.5 million, comprised of the assumption of $21.14.1 million in debt (which approximated fair value as of the closing date) and 1,575,185 Class A units of limited partnership interest in the Operating Partnership ("Class A Units" or "OP Units").


As part, the assumption of the Southgate Square purchase agreement, the Company acquired an option to purchase an adjacent undeveloped land parcel from the seller. The option for the land parcel is valid for an initial period$35.7 million of two years,mortgage debt principal, and its value would be determined by applying a mutually agreed upon capitalization rate to the base rent of tenants provided by the seller and approved by the Company. If, at the end of the two-year period, no suitable tenants have been found, the Company has the option of either paying $3.0 million to the seller for the land parcel or extending the period for an additional year. If, at the end of the additional year, no suitable tenants have been found, the Company can either pay $1.25 million to the seller for the land parcel or let the option expire. Management has evaluated the option and determined that its value is immaterial to the consolidated financial statements.

On August 4, 2016, the Company completed the acquisition of Southshore Shops, a 40,000 square foot retail center located in Midlothian, Virginia, for aggregate consideration of $9.3 million, comprised of $6.7$4.5 million in cash and 189,160 Class A Units.

On October 13, 2016,cash. The negotiated price was $105.0 million, which contemplated the Company completed the acquisition of Columbus Village II, a 92,000 square foot retail and entertainment center located in Virginia Beach, Virginia for aggregate consideration of 2,000,000 sharesprice of the Company's common stock of $15.55 per share when the purchase and sale agreement was executed. The aggregate acquisition cost was $109.3 million, which based onconsisted of 4.1 million Class A Units valued at $68.1 million (using the closingprice of the Company's common stock priceof $16.50 on the date of the acquisition), mortgage debt valued at $35.6 million, cash consideration of $4.5 million, and capitalized acquisition ledcosts of $1.1 million. In connection with the acquisition, the Company and the Operating
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Partnership entered into a tax protection agreement with the contributors pursuant to an acquisition pricewhich the Company and the Operating Partnership agreed, subject to certain exceptions, to indemnify the contributors for up to 10 years against certain tax liabilities incurred by them, if such liabilities result from a transaction involving a direct or indirect taxable disposition of $26.2either or both of these properties or if the Operating Partnership fails to maintain and allocate to the contributors for taxation purposes minimum levels of Operating Partnership liabilities.

On June 26, 2019, the Company acquired Thames Street Wharf, a Class A office building located in the Harbor Point development of Baltimore, Maryland, for $101.0 million excludingin cash and $0.3 million of capitalized acquisition costs.

On November 17, 2016, the Company completed the acquisition of Renaissance Square, a 80,000 square foot retail center located in Davidson, North Carolina, for $17.1 million, excluding capitalized acquisition costs.


The following table summarizes the purchase price allocation (including acquisition costs for Columbus Village II and Renaissance Square)costs) based on the relative fair value of the assets acquired and intangible liabilities assumed for the 6 operating properties acquired during the year ended December 31, 20162019 (in thousands):

Wendover Village outparcelOne City Center1405 PointRed Mill CommonsMarketplace at HilltopThames Street Wharf
Land$1,633 $2,678 $0 (a)$44,252 $2,023 (b)$15,861 
Site improvements50 163 298 2,558 691 150 
Building and improvements888 28,039 92,866 27,790 19,195 64,539 
Furniture and fixtures0 0 2,302 0 0 0 
In-place leases101 15,140 3,371 9,973 4,565 24,385 
Above-market leases111 0 0 1,463 599 0 
Below-market leases0 0 0 (6,221)(1,136)(3,636)
Finance lease liabilities0 0 (8,671)0 (9,200)0 
Finance lease right-of-use assets0 0 11,730 (a)0 12,770 (b)0 
Net assets acquired$2,783 $46,020 $101,896 $79,815 $29,507 $101,299 

(a) Land is subject to a ground lease.
(b) Portion of land is subject to a ground lease.
 
Retail
Portfolio
 
Southgate Square
 Southshore Shops Columbus Village II Renaissance Square Total
Land$66,260
 $8,890
 $1,770
 $14,536
 $6,730
 $98,186
Site improvements3,870
 2,140
 490
 939
 303
 7,742
Building and improvements88,820
 23,810
 6,019
 9,983
 8,137
 136,769
In-place leases20,630
 5,990
 1,140
 2,225
 2,008
 31,993
Above-market leases1,960
 100
 120
 —
 70
 2,250
Below-market leases(11,040) (1,400) (190) (939) (10) (13,579)
Net assets acquired$170,500
 $39,530
 $9,349
 $26,744
 $17,238
 $263,361


Rental revenues and net income from the 2016 acquired properties for the period from the respective acquisition dates to December 31, 2016 included in the consolidated statement of comprehensive income was $18.7 million and $2.9 million, respectively.

20152018 Operating Property Acquisitions


On April 8, 2015, the Company completed the acquisitions of Stone House Square in Hagerstown, Maryland and Perry Hall Marketplace in Perry Hall, Maryland. In exchange for both properties, the Company paid $35.4 million of cash and issued 415,500 shares of common stock. The acquisition date fair value of the total consideration transferred in exchange for Stone House Square and Perry Hall Marketplace was $39.8 million.
On July 1, 2015, the Company completed the acquisition of Socastee Commons, a 57,000 square foot retail center in Myrtle Beach, South Carolina. The total consideration for Socastee Commons was $8.7 million, which was comprised of $3.7 million of cash and the assumption of debt with an outstanding principal balance of $5.0 million. The fair value adjustment to the assumed debt of Socastee Commons was a $0.1 million premium.
On July 10, 2015, the Company acquired Columbus Village, a 65,000 square foot retail center in Virginia Beach, Virginia. In exchange for Columbus Village, the Company assumed debt with an aggregate outstanding principal balance and fair value of $8.8 million, issued 1,000,000 Class B units of limited partnership interest in the Operating Partnership (“Class B Units”) and agreed to issue 275,000 Class C units of limited partnership interest in the Operating Partnership (“Class C Units”) on January 10, 2017. The Class B Units were automatically converted to

Class A Units on July 10, 2017. The Class C Units were converted to Class A Units on January 10, 2018. The acquisition date fair value of the total consideration transferred in exchange for Columbus Village was $19.2 million.
On September 1, 2015, the Company acquired Providence Plaza in Charlotte, North Carolina for $26.2 million of cash. Providence Plaza is a mixed-use property comprised of three buildings totaling 103,000 square feet, a two-level parking garage and approximately one acre of land zoned for multifamily development.

The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed during the year ended December 31, 2015 (in thousands):
Land$29,500
Site improvements3,290
Building and improvements49,260
In-place leases14,160
Above-market leases2,260
Below-market leases(4,420)
Indebtedness(13,935)
Net assets acquired$80,115
Rental revenues and net income from the 2015 acquired properties for the period from the respective acquisition dates to December 31, 2015 included in the consolidated statement of comprehensive income was $4.8 million and $0.8 million, respectively.
Pro Forma Financial Information (Unaudited)
The following table summarizes the consolidated results of operations of the Company on a pro forma basis, as if the 2017 acquisition had been acquired on January 1, 2016, each of the 2016 acquisitions had been acquired on January 1, 2015, and each of the 2015 acquisitions had been acquired on January 1, 2014 (in thousands): 
 Years Ended December 31, 
 2017 2016 2015
Rental revenues$109,472
 $102,579
 $105,479
Net income30,354
 14,060
 18,492
The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if these acquisitions had taken place on January 1, 2016, 2015, and 2014. The pro forma financial information includes adjustments to rental revenue and rental expenses for above and below-market leases, adjustments to depreciation and amortization expense for acquired property and in-place lease assets and adjustments to interest expense for fair value adjustments to assumed debt. 
Subsequent to December 31, 2017

On January 9, 2018, the Company acquired Indian Lakes Crossing, a Harris Teeter-anchored shopping center in Virginia Beach, Virginia, for a contract price of $14.7$14.7 million plus capitalized acquisition costs of $0.2 million. This property was sold in 2020.


On January 29, 2018, the Company acquired Parkway Centre, a newly developed Publix-anchored shopping center in Moultrie, Georgia, for total consideration of $11.3 million ($9.6(comprised of $9.6 million in cash and $1.7 million in the form of Class A Units) plus estimated capitalized acquisition costs of $0.3 million.


On August 28, 2018, the Company acquired Lexington Square, a newly developed Lowes Foods-anchored shopping center in Lexington, South Carolina, for a purchase price of $27.0 million, consisting of cash consideration of $24.2 million and $2.8 million of additional consideration in the form of Class A Units issued during 2019. As part of this transaction, the Company also capitalized acquisition costs of $0.4 million.
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The following table summarizes the purchase price allocation (including acquisition costs) based on relative fair value of the assets acquired and liabilities assumed for the 3 operating properties purchased during the year ended December 31, 2018 (in thousands):
Indian Lakes CrossingParkway CentreLexington Square
Land$10,926 $1,372 $3,036 
Site improvements531 696 7,396 
Building and improvements1,913 7,168 10,387 
In-place leases1,648 2,346 4,113 
Above-market leases11 0 89 
Below-market leases(175)(10)(447)
Net assets acquired$14,854 $11,572 $24,574 

Other 2020 Real Estate Transactions

On January 10, 2020, the Company entered into an operating agreement with a partner to develop a mixed-use property in Charlotte, North Carolina. The Company has an 80% interest in 10th and Tryon Partners, LLC (the "Tryon Partnership"). On January 10, 2020, the Tryon Partnership purchased land for a purchase price of $6.3 million for this project. The Company is responsible for funding the equity requirements of this development, including the $6.3 million purchase of the land. Management has concluded that this entity is a VIE as it lacks sufficient equity to fund its operations without additional financial support. The Company is the developer of the project and has the power to direct the activities of the project that most significantly impact its financial performance. Therefore, the Company is the project's primary beneficiary and consolidates the Tryon Partnership in its consolidated financial statements.

On September 12, 2019, the Company entered into an operating agreement with a partner to develop a mixed-use property in Belmont, North Carolina. The Company has an 85% interest in Chronicle Holdings, LLC (the "Chronicle Partnership"). On March 20, 2020, the Chronicle Partnership purchased land for a purchase price of $2.3 million for this project. The Company is responsible for funding the equity requirements of this development, including the $2.3 million purchase of the land. Management has concluded that this entity is a VIE as it lacks sufficient equity to fund its operations without additional financial support. The Company is the developer of the project and has the power to direct the activities of the project that most significantly impact its financial performance. Therefore, the Company is the project's primary beneficiary and consolidates the Chronicle Partnership in its consolidated financial statements.

On May 29, 2020, the Company sold a portfolio of 7 retail properties for $90.0 million. The portfolio consisted of Alexander Pointe, Bermuda Crossroads, Gainsborough Square, Harper Hill Commons, Indian Lakes Crossing, Renaissance Square, and Stone House Square. The gain on sale was $2.8 million. In connection with the sale of this portfolio, the Company repaid $61.9 million on the revolving credit facility, resulting in net proceeds of $25.9 million.

On August 31, 2020, the Company entered into an operating agreement with a partner to develop a mixed-use project in Gainesville, Georgia. The Company has a 95% ownership interest in Gainesville Development, LLC (the "Gainesville Partnership"). The Gainesville Partnership acquired undeveloped land on August 31, 2020 for a purchase price of $5.0 million and immediately began development of the site. The Company is responsible for funding the equity requirements of this development, which are estimated to total $17.3 million. Management has concluded that this entity is a VIE as it lacks sufficient equity to fund its operations without additional financial support. By August 31, 2023, the Company is required to acquire its partner's 5% ownership interest for up to $4.2 million, subject to the initial operating performance of the property. As the Company is required to obtain this ownership interest, the Company consolidates the project in its consolidated financial statements. The Company has recorded a note payable liability of $3.8 million, which is the fair value of the anticipated payments to be made to its partner.

On September 1, 2020, the Company completed the sale of the Walgreens outparcel at Hanbury Village. Net proceeds after the transaction costs were $7.0 million. The gain on disposition was $3.6 million.

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On October 2, 2020, the Company purchased the remaining 20% noncontrolling interest in the Southern Post, a mixed-use development project in Roswell, Georgia in exchange for a cash payment of $3.5 million and future consideration of $1.5 million to be paid in cash upon satisfaction of certain conditions.

Other 2019 Real Estate Transactions

On April 1, 2019, the Company sold Waynesboro Commons for a sale price of $1.1 million. There was no gain or loss recognized on the disposition.

On August 15, 2019, the Company sold Lightfoot Marketplace for a sale price of $30.3 million. The gain on disposition was $4.5 million. In conjunction with this sale, the Company paid off the $17.9 million note payable secured by this property. The Company retained the interest rate swap associated with the note payable.

On October 15, 2019, the Company entered into an operating agreement with a partner to develop the Southern Post, a mixed-use project in Roswell, Georgia. The Company has an 80% interest in the partnership. On October 25, 2019, the partnership, 1023 Roswell, LLC, purchased land for a purchase price of $5.0 million in cash for this project. The Company is responsible for funding the equity requirements of this development, including the $5.0 million purchase of the land. Management has concluded that this entity is a VIE as it lacks sufficient equity to fund its operations without additional financial support. The Company is the developer of the project and has the power to direct the activities of the project that most significantly impact its performance and is the party most closely associated with the project. Therefore, the Company is the project's primary beneficiary and consolidates the project in its consolidated financial statements.

Other 2018 Real Estate Transactions

On November 30, 2017, the Company entered into a lease agreement with Bottling Group, LLC for a new distribution facility that the Company will developdeveloped and construct for expected delivery in 2018.constructed. On January 29, 2018, the Company acquired undeveloped land in Chesterfield, Virginia, a portion of which will serveserves as the site for this facility, for a contract price of $2.4 million plus capitalized acquisition costs of $0.1 million. On December 20, 2018, the Company sold the completed facility for $25.9 million, resulting in a gain of $3.4 million.



On February 16,January 18, 2018, through a consolidated joint venture, the Company acquired undeveloped landentered into an operating agreement with a partner to develop a Lowes Foods-anchored shopping center in Mount Pleasant, South CarolinaCarolina. The Company has a 70% ownership interest in the partnership. The partnership, Market at Mill Creek Partners, LLC, acquired undeveloped land on February 16, 2018 for a contract price of $2.9 million plus capitalized acquisition costs of $0.1 million. The Company plansis responsible for funding the equity requirements of this development. Management has concluded that this entity is a VIE as it lacks sufficient equity to usefund its operations without additional financial support. The Company was the land fordeveloper of the developmentshopping center and has the power to direct the activities of an estimated $23.0 million Lowes Foods-anchored shopping center.the project that most significantly impact its performance and is the party most closely associated with the project. Therefore, the Company is the project's primary beneficiary and consolidates the project in its consolidated financial statements.

Other 2017 Real Estate Transactions


On January 4, 2017,April 2, 2018, the Company acquired undeveloped land in Charleston, South CarolinaNewport News, Virginia for a contract price of $7.1 million plus capitalized acquisition costs of $0.2less than $0.1 million. The Company is using theThis land forparcel was used in the development of the 595 King StreetBrooks Crossing Office property.


On January 20, 2017,May 24, 2018, the Company completed the sale of the Wawa outparcel at Greentree Shopping Center. Net proceeds after transaction costs were $4.4 million. The gain on the disposition was $3.4 million.

On July 11, 2017, the Company acquired undeveloped land in Charleston, South CarolinaIndian Lakes Crossing for a contract price of $7.2 million plus capitalized acquisition costs of $0.1$4.4 million. The Company is usingThere was 0 gain or loss on the land for the development of the 530 Meeting Street property.disposition.


On July 13, 2017,2, 2018, the Company completedexecuted a ground lease for the sale of two office properties leased by the Commonwealth of Virginia in Chesapeake, Virginia and Virginia Beach, Virginia. Aggregate net proceeds from the dispositions of the properties after transaction costs and repayment of the loan associated with the Chesapeake, Virginia property were $7.9 million, and the aggregate gain on the dispositions was $4.2 million.

On August 10, 2017, the Company completed the salesite of a land outparcel at Sandbridge Commons. Net proceeds after transaction costs and a partial loan paydown were $0.3 million. The gain on the disposition was $0.5 million.
Other 2016 Real Estate Transactions

On January 7, 2016, the Company completed the sale of a building constructed for the Economic Development Authority of Newport News, Virginia.  Net proceeds after transaction costs were $6.6 million.  The gain on the disposition was $0.4 million.

On January 8, 2016, the Company completed the sale of the Richmond Tower office building for $78.0 million. Net proceeds after transaction costs were $77.0 million. The gain on the disposition of Richmond Tower was $26.2 million.

On June 20, 2016, the Company completed the sale of the Willowbrook Commons property located in Nashville, Tennessee for $9.2 million.  The gain on the sale of the Willowbrook Commons property was less than $0.1 million.
On July 29, 2016, the Company completed the sale of the Kroger Junction property located in Pasadena, Texas for $3.7 million. The loss on the sale of the Kroger Junction property was less than $0.1 million.

On August 30, 2016, the Company entered into an operating agreement with Southern Apartment Group-Harding, LLC ("SAGH") to jointly develop an apartmentnew mixed-use development project at Wills Wharf, a site in Charlotte, North Carolina. During the year ended December 31, 2016, the Company purchased $5.7 millionHarbor Point area of land in conjunction with the project.Baltimore, Maryland. The lease has an initial term of five years and includes 10 extension options of seven years each.

On September 15, 2016, the Company completed the sale of the Oyster Point office property for $6.4 million. Net proceeds after transaction costs and settlement of liabilities were not significant. The gain on the disposition of Oyster Point was $3.8 million.


On December 22, 2016,31, 2018, the Company completedsold the sale of land adjacent toleasehold interest in the Brooks Crossing developmentbuilding previously leased by Home Depot at Broad Creek Shopping Center for $0.4 million. The gain on the disposition of the land was less than $0.1 million.
Other 2015 Real Estate Transactions
On January 5, 2015, the Company completed the sale of the Sentara Williamsburg office property for $15.4 million. Net proceeds to the Company after transaction costs were $15.2 million. The Company recognized$2.4 million, resulting in a gain on the disposition of the Sentara Williamsburg office property of $6.2 million. 

On March 31, 2015, the Company purchased land held for development in the Town Center of Virginia Beach, Virginia for $1.2 million.
On May 20, 2015, the Company completed the sale of Whetstone Apartments for $35.6 million. Net proceeds to the Company after transaction costs were $35.5 million. The Company recognized a gain on the disposition of Whetstone Apartments of $7.2 million. 
On October 5, 2015, the Company purchased 3.24 acres of land in Newport News, Virginia for $0.1 million for the development of Brooks Crossing, a new urban, mixed-use and low-rise development project, in partnership with the City of Newport News.

On October 30, 2015, the Company completed the sale of the Oceaneering International facility for $30.0 million. Net proceeds to the Company after transaction costs were $29.0 million. The Company recognized a gain on the disposition of Oceaneering of $5.0$0.8 million.

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Equity Method InvestmentsInvestment


City CenterHarbor Point Parcel 3


On February 25, 2016,November 30, 2020, the Company acquired a 37%50% interest in Durham City Center II, LLC (“City Center”)Harbor Point Parcel 3, a joint venture with Beatty Development Group, for purposes of developing a 22-story mixed-use towerT. Rowe Price's new global headquarters office building in Durham, North Carolina.Baltimore, Maryland. The Company is a minoritynoncontrolling partner in the joint venture and will serve as the project's general contractor, with full ownershipcontractor. During the year ended December 31, 2020, the Company invested $1.1 million in Harbor Point Parcel 3. The Company has a total equity commitment of the office and retail portions of theup to $30.0 million relating to this project. As of December 31, 2017 and 2016, the Company has invested $11.4 million and $10.3 million, respectively, in City Center. The Company has agreed to guarantee 37% of the construction loan for City Center; however, the loan is collateralized by 100% of the assets of City Center. As of December 31, 2017, $29.2 million has been drawn against the construction loan, of which $11.2 million is attributable to the Company's portion of the loan. As of December 31, 2016, the construction loan had not been drawn against.

As of December 31, 2017, the difference between2020, the carrying value of the Company’s initialCompany's investment in City Center and the amount of underlying equityHarbor Point Parcel 3 was immaterial.$1.1 million. For the yearsyear ended December 31, 2017 and 2016, City Center did not have any2020, Harbor Point Parcel 3 had no operating activity, and therefore the Company did not receive any dividends orreceived no allocated income. 

Based on the terms of City Center’sthe operating agreement, the Company has concluded that City CenterHarbor Point Parcel 3 is a VIE and that the Company holds a variable interest. The Company does not have the power to direct the activities of the project that most significantly impact its performance. Accordingly, the Company is not the project’s primary beneficiary and, therefore, does not consolidate City CenterHarbor Point Parcel 3 in its consolidated financial statements. The Company has significant influence over the project due to its 50% ownership as well as certain rights and responsibilities relating to the development project. The Company's investment in the project is recorded as an equity method investment in the consolidated balance sheets.


6.Notes Receivable
6.    Notes Receivable and Allowance for Loan Losses

Notes Receivable

The Company had the following loans receivable outstanding as of December 31, 2020 and December 31, 2019 ($ in thousands):
    
Point Street Apartments
Outstanding loan amountMaximum loan commitmentInterest rateInterest compounding
Development ProjectDecember 31, 2020December 31, 2019
The Residences at Annapolis Junction$0 $40,049 N/AN/A(a)N/A
Delray Plaza14,289 12,995 17,000 15.0 %(a)(b)Annually
Nexton Square0 15,097 N/AN/AN/A
Interlock Commercial85,318 59,224 103,000 15.0 %(c)None
Solis Apartments at Interlock28,969 25,588 41,100 13.0 %Annually
Total mezzanine128,576 152,953 $161,100 
Other notes receivable6,809 1,147 
Notes receivable guarantee premium2,631 5,271 
Allowance for credit losses(2,584)0 
Total notes receivable$135,432 $159,371 

(a) Loan was placed on nonaccrual status effective April 1, 2020.

(b) $2.0 million of this loan is subject to an interest rate of 6%.
(c) $3.0 million of this loan is subject to an interest rate of 18%.

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Interest on the mezzanine loans is accrued and funded utilizing the interest reserves for each loan, which are components of the respective maximum loan commitments, and such accrued interest is added to the loan receivable balances. The Company recognized interest income for the years ended December 31, 2020, 2019, and 2018 as follows (in thousands):
Years Ended December 31, 
Development Project202020192018
1405 Point$0 $783 $2,080 
The Residences at Annapolis Junction2,468 (a)(b)8,776 (b)4,939 (b)
North Decatur Square0 1,509 2,212 
Delray Plaza489 (a)1,622 928 
Nexton Square1,177 1,962 235 
Interlock Commercial12,267 (c)6,142 (c)202 
Solis Apartments at Interlock3,382 2,333 55 
Total mezzanine19,783 23,127 10,651 
Other interest income58 88 78 
Total interest income$19,841 $23,215 $10,729 

(a) Loan was placed on nonaccrual status effective April 1, 2020.
(b) Includes amortization of the $5.0 million loan modification fee paid by the borrower in November 2018. Additionally, the 2020 and 2019 amounts include $1.5 million and $0.5 million, respectively, of interest income recognition relating to an exit fee that was due upon repayment of the loan.
(c) The 2020 and 2019 amounts included $2.3 million and $0.6 million, respectively, of interest income recognition relating to an exit fee that is due upon repayment of the loan.

1405 Point

On October 15, 2015, the Company agreed to invest up toentered into a note receivable with a maximum principal balance of $28.2 million infor the 1405 Point Street Apartments project in the Harbor Point area of Baltimore, Maryland.Maryland (also known as Point Street Apartments is an estimated $98.0 million development project with plansApartments).

On April 24, 2019, the Company exercised its option to purchase 79% of the interest in the partnership that owns 1405 Point in exchange for a 17-story building comprised of 289 residential units and 18,000 square feet of street-level retail space. Beatty Development Group (“BDG”) is the developer ofextinguishing its note receivable on the project and has engaged the Company to serve as construction general contractor. Point Street Apartments is scheduled to open in the first quartera cash payment of 2018; however, management can provide no assurances that Point Street Apartments will open on the anticipated timeline or be completed at the anticipated cost.
BDG secured a senior construction loan of up to $67.0 million to fund the development and construction of Point Street Apartments on November 10, 2016.$0.3 million. The Company has agreed to guarantee $25.0 million of the senior construction loan in exchange for the option to purchase up to an 88% controlling interest in Point Street Apartments upon completion of the project as follows: (i) an option to purchase a 79% indirect interest in Point Street Apartments for $27.3 million, exercisable within one year from the project’s completion (the “First Option”) and (ii) provided that the Company has exercised the First Option, an option to purchase an additional 9% indirect interest in Point Street Apartments for $3.1 million, exercisable within 27 months from the project’s completion (the “Second Option”). The Company currently has a $2.1 million letter of credit for the guarantee of the senior construction loan.

The Company’s investment in the Point Street Apartments project is in the form of a loan under which BDG may borrow up to $28.2 million (the “BDG loan”). Interest on the BDG loan accrues at 8.0% per annum and matures on the earliest of: (i) November 1, 2018, which may be extended by BDG under two one-year extension options, (ii) the maturity date or earlier termination of the senior construction loan, or (iii) the date the Company exercises the Second Option as described further below.
In the event the Company exercises the First Option, BDG is required to pay down the outstanding BDG loan in full, with the difference between the BDG loan and $28.2 million applied to the senior construction loan. In the event the Company exercises the Second Option, BDG is required to simultaneously repay any remaining amounts outstanding under the BDG loan, with any excess proceeds received from the exercise of the Second Option applied against the senior construction loan. In the event the Company does not exercise either the First Option or the Second Option, the interest rate on the BDG loan will automatically be reduced to the interest rate on the senior construction loan for the remaining term of the BDG loan.
As of December 31, 2017 and 2016, the Company had funded $22.4 million and $20.6 million, respectively, under the BDG loan and for the years ended December 31, 2017 and 2016, the Company recognized $1.7 million and $1.2 million, respectively, of interest income on the BDG loan. No portion of the note receivable balance is past due, and the Company has not recorded an impairment balance on the note.

Management has concluded that this entity is a VIE. Because BDG is the developer of Point Street Apartments, the Company does not have the power to direct the activities of the project that most significantly impact its performance, nor is the Company the party most closely associated with the project. Therefore, the Company is not the project's primary beneficiary and does not consolidateconsolidated the project in its consolidated financial statements.statements for the year ended December 31, 2019. The project was acquired subject to a loan payable of $64.9 million.


The Residences at Annapolis Junction


On April 21, 2016, the Company entered into a note receivable with a maximum principal balance of $48.1 million in the Annapolis Junction residential component of the Annapolis Junction Town Center project in Maryland (“("Annapolis Junction”Junction"). The Residences at Annapolis Junction is an estimated $106.0 million mixed-useapartment development project with plans for 416 residential units., It is part of a mixed-use development project that is also planned to have 17,000 square feet of retail space and a 150-room hotel. Annapolis Junction Apartments Owner, LLC (“AJAO”("AJAO") is the developer of the residential component and has engaged the Company to serve as construction general contractor for the residential component. Portions ofThe Residences at Annapolis Junction opened during the third and fourth quarters of 2017 and the remaining portions are scheduled to open during the first quarter of 2018; however, management can provide no assurances that Annapolis Junction will open on the anticipated timeline or at the anticipated cost.2018.
 
AJAO securedOn October 30, 2020, the Company acquired 79% of AJAO. As part of this purchase, the Company extinguished its note receivable for this project, assumed an $83.4 million senior loan, and made a senior construction loancash payment of up to $60.0 million to fund the development and construction of Annapolis Junction's residential component on September 30, 2016.$0.2 million. The Company has agreed to guarantee up to $25.0 million of the senior construction loan in exchange for the option to purchase up to an 88% controlling interest in Annapolis Junction upon completion of the project as follows: (i) an option to purchase an 80% indirect interest in Annapolis Junction's residential component for the lesser of the seller’s budgeted or actual cost, exercisable within one year from the project’s completion (the “First Option”) and (ii) provided that the Company has exercised the First Option, an option to purchase an additional 8% indirect interest in Annapolis Junction for the lesser of the seller’s actual or budgeted cost, exercisable within 27 months from the project’s completion (the “Second Option”).
The Company’s investment in the Annapolis Junction project is in the form of a loan under which AJAO may borrow up to $48.1 million, including a $6.0 million interest reserve (the “AJAO loan”). Interest on the AJAO loan accrues at 10.0% per annum and matures on the earliest of: (i) December 21, 2020, which may be extended by AJAO under two one-year extension options, (ii) the maturity date or earlier termination of the senior construction loan, or (iii) the date the Company exercises the Second Option as described further below. In the event that the Company exercises the First Option, AJAO is required to simultaneously pay down both the senior construction loan and the AJAO loan by 80%, at which time the interest rate on the AJAO loan will automatically be reduced to the interest rate on the senior construction loan. In the event the Company exercises the Second Option, AJAO is required to simultaneously repay any remaining amounts outstanding under the AJAO loan, with any excess proceeds received from the exercise of the Second Option applied against the remaining balance of the senior construction loan. In the event that the Company does not exercise either the First Option or the Second Option, the interest rate on the AJAO loan will automatically be reduced to the interest rate on the senior construction loan for the remaining term of the AJAO loan. 


The balance on the Annapolis Junction note was $43.0 million and $38.9 million as of December 31, 2017 and 2016, respectively. During the years ended December 31, 2017 and 2016, the Company recognized $4.1 million and $2.0 million, respectively, of interest income on the note. No portion of the note receivable balance is past due, and the Company has not recorded an impairment balance on the note.

Management has concluded that this entity is a VIE. Because AJAO is the developer of Annapolis Junction, the Company does not have the power to direct the activities of the project that most significantly impact its performance, nor is the Company the party most closely associated with the project. Therefore, the Company is not the project's primary beneficiary and does not consolidateconsolidated the project in its consolidated financial statements.statements for the year ended December 31, 2020.


North Decatur Square


On May 15, 2017, the Company invested in the development of an estimated $34.0 million Whole Foods anchoredFoods-anchored center located in Decatur, Georgia. The Company's investment iswas in the form of a mezzanine loan of up to $21.8 million to the developer, North Decatur Square Holdings, LLC ("NDSH"). The mezzanineInterest on the loan bears interesthad accumulated at an annuala rate of 15%. The note matures on15.0% per annum. During 2018, this loan was modified to increase the earliest of (i) May 15, 2022, (ii) the maturitymaximum amount of the senior construction loan (iii)to $29.7 million due to an increase in the sale of NDSH or (iv) the salesquare footage of the center. NDSH is current on this loan.Whole Foods store.

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As of December 31, 2017,
On July 22, 2019, the Company had funded $11.8 million on this loan. Duringborrower paid off the year ended December 31, 2017, the Company recognized $1.0 million of interest income on this loan. No portion of the note receivable balance is past due, and the Company has not recorded an impairment balance on the note.

Management has concluded that this entity is a VIE. Because NDSH is the developer of North Decatur Square note receivable in full. The Company received the Company does not haveoutstanding principal and interest in the power to direct the activitiesamount of the project that most significantly impact its performance. Therefore, the Company is not the project's primary beneficiary and does not consolidate the project in its consolidated financial statements.$20.0 million.


Delray Plaza


On October 27, 2017, the Company invested in the development of an estimated $20.0 million Whole Foods anchoredFoods-anchored center located in Delray Beach, Florida. The Company's investment iswas in the form of a mezzanine loan of up to $13.1 million to the developer, Delray Plaza Holdings, LLC ("DPH"). The Company has agreed to guarantee payment of up to $4.8 million of the senior construction loan. On January 8, 2019, this loan was modified to increase the maximum amount of the loan to $15.0 million and the payment guarantee amount increased to $5.2 million. The mezzanine loan bears interest at an annuala rate of 15%. The note matures on15.0% per annum.

During 2020, the earliest ofDelray Plaza loan was modified to (i) October 27, 2020, (ii)increase the date of any sale or refinancemaximum amount of the loan to $17.0 million, with $2.0 million of additional funds borrowed at an interest rate of 6% in order to fund final development activities, (ii) extend the maturity date to April 1, 2020, and (iii) require the borrower to tender 125,843 Class A Units that were pledged as collateral for this loan and establish a $2.5 million reserve account to be used for certain unpaid development project or (iii) the disposition or change in control of the development project.costs.

As of December 31, 2017, the Company had funded $5.4 million on this loan. During the year ended December 31, 2017, the Company recognized $0.2 million of interest income on this loan. No portion of the note receivable balance is past due, and the Company has not recorded an impairment balance on the note.


Management has concluded that this entity is a VIE. Because DPH is the developer of Delray Plaza, the Company does not have the power to direct the activities of the project that most significantly impact its performance. Therefore, the Company is not the project's primary beneficiary and does not consolidate the project in its consolidated financial statements.


Subsequent to December 31, 2017Nexton Square


On JanuaryAugust 31, 2018, the North DecaturCompany financed a $2.2 million bridge loan to SC Summerville Brighton, LLC ("Brighton"), the developer of Nexton Square, a shopping center development project located in Summerville, South Carolina. The shopping center may comprise as many as 16 buildings. The loan was subsequently increased to $17.0 million.

On September 22, 2020, the Company exercised its option to purchase Nexton Square for $17.9 million cash and the assumption of a note payable of $22.9 million. The Company also incurred capitalized acquisition costs of $0.2 million. The developer of this property repaid the Company's mezzanine note receivable of $16.4 million at the time of the acquisition.

Interlock Commercial

In October 2018, the Company financed a bridge loan with a maximum commitment of $4.0 million to The Interlock, LLC ("Interlock"), the developer of the office and retail components of The Interlock, a new mixed-use public-private partnership with Georgia Tech in West Midtown Atlanta. This loan was subsequently modified as described below.

On December 21, 2018, the Company entered into a mezzanine loan agreement with Interlock for a maximum principal amount of $67.0 million and a total maximum commitment, including accrued interest reserves, of $95.0 million. The previous loan was repaid from proceeds of the mezzanine loan. The mezzanine loan bears interest at a rate of 15.0% per annum and matures at the earlier of (i) 24 months after the original maturity date or earlier termination date of the senior construction loan or (ii) any sale, transfer, or refinancing of the project. In the event that the maturity date is established as being 24 months after the original maturity date or earlier termination date of the senior construction loan, Interlock will have the right to extend the maturity date for 5 years.

On April 19, 2019, the borrower executed its senior construction loan, and the Company's payment guarantee of up to $30.7 million became effective. See Note 15 for additional information. See Note 18 for additional discussion.

In May 2020, the Company modified the Interlock Commercial loan to allow for an additional $8.0 million of loan funding; this additional loan funding may be available for cost overruns as well as the building of townhome units as an additional phase of this development project. The borrower subsequently decided to forego development of these townhome units. The borrower also modified the senior construction loan on the project.

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On October 2, 2020, the Interlock Commercial loan was modified to increasedecrease the maximum amountexit fee, subject to the satisfaction of certain conditions. As a result, the exit fee for this loan may range from $6.5 million to $7.5 million.The Company has reduced its estimate of exit fees to be collected to $6.5 million and prospectively adjusted the recognition of the exit fee in interest income. The Company has recognized $2.9 million of this fee as of December 31, 2020.

Management has concluded that this entity is a VIE. Because Interlock is the developer of The Interlock, the Company does not have the power to direct the activities of the project that most significantly impact its performance. Therefore, the Company is not the project's primary beneficiary and does not consolidate the project in its consolidated financial statements.

Solis Apartments at Interlock

On December 21, 2018, the Company entered into a mezzanine loan agreement with Interlock Mezz Borrower, LLC ("Solis Interlock"), the developer of Solis Apartments at Interlock, which is the apartment component of The Interlock. The mezzanine loan has a maximum principal commitment of $25.2 million and a total maximum commitment, including accrued interest reserves, of $41.1 million. The mezzanine loan bears interest at a rate of 13.0% per annum and matures on the earlier of (a) the later of (i) December 21, 2021 or (ii) the maturity date or earlier termination date of the senior construction loan, including any extensions of the senior construction loan, or (b) the date of any sale of the project or refinance of the loan.

Management has concluded that this entity is a VIE. Because Solis Interlock is the developer of Solis Apartments at Interlock, the Company does not have the power to direct the activities of the project that most significantly impact its performance. Therefore, the Company is not the project's primary beneficiary and does not consolidate the project in its consolidated financial statements.

Harbor Point Parcel 3

On December 15, 2020, the Company funded a $6.8 million loan to $25.7Harbor Point Parcel 3 Holdings, LLC ("Parcel 3 Holdings"), the developer and the Company's joint venture partner for the development of future Harbor Point Parcel 3 office building in Baltimore, Maryland. Harbor Point Parcel 3 is a project to develop and build T. Rowe Price's new 450,000 square feet global headquarters in Baltimore's Harbor Point. The loan bears interest at a rate of 6% per annum and is secured by the joint venture membership interest held by Parcel 3 Holdings. The loan matures on December 1, 2021 and has an option to extend the maturity date to March 1, 2022.

Guarantee liabilities

As of December 31, 2020, the Company had outstanding payment guarantees for the senior loans on Delray Plaza, and Interlock Commercial as described above. As of December 31, 2020 and 2019, the Company has recorded a guarantee liability of $2.6 million and $5.3 million, respectively, representing their unamortized fair value. These guarantees are classified as other liabilities on the Company's consolidated balance sheets, with a corresponding adjustment to the notes receivable balance on the consolidated balance sheets. See Note 18 for additional information on the Company's outstanding guarantees.

Allowance for Loan Losses

The Company is exposed to credit losses primarily through its mezzanine lending activities. As of December 31, 2020, the Company had 3 mezzanine loans, all of which are secured by second liens on development projects in various stages of completion or lease-up. Each of these projects is subject to a loan that is senior to the Company’s mezzanine loan. Interest on these loans is paid in kind and is generally not expected to be paid until a sale of the project after completion of the development.

The Company updated the risk ratings for each of its notes receivable as of December 31, 2020 and obtained industry loan loss data relative to these risk ratings. The Company’s analysis resulted in an allowance for loan losses of approximately $2.6 million as of the year ended December 31, 2020.

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The following table presents amortized cost basis of the portfolio by year of origination and risk rating as of December 31, 2020 (in thousands):

Year of Origination
Risk Ratings20202019201820172016Total
Pass$6,766 $0 $115,082 $0 $0 $121,848 
Special Mention0 0 0 0 0 0 
Substandard0 0 0 13,570 0 13,570 
Total amortized cost basis$6,766 $0 $115,082 $13,570 $0 $135,418 

As of December 31, 2019, there was no allowance for loan losses. At December 31, 2020, the Company reported $135.4 million of notes receivable, net of allowances of $2.6 million. Changes in the allowance for the year ended December 31, 2020 were as follows (in thousands):

7.Construction ContractsTwelve Months Ended December 31, 2020
Beginning balance (December 31, 2019)$0 
Cumulative effect of accounting change2,825 
Unrealized credit loss provision256 
Extinguishment due to acquisition(497)
Ending balance$2,584 

As of December 31, 2019, there were no loans on nonaccrual status. During the year ended December 31, 2020, the Company placed the loans for Delray Plaza and The Residences at Annapolis Junction on nonaccrual status with total amortized cost basis of $13.6 million. As a result, there was $5.1 million of interest income not recognized during the twelve months ended December 31, 2020.

7.    Construction Contracts
 
Construction contract costs and estimated earnings in excess of billings represent reimbursable costs and amounts earned under contracts in progress as of the balance sheet date. Such amounts become billable according to contract terms, which usually consider the passage of time, achievement of certain milestones, or completion of the project. The Company expects to bill and collect substantially all construction contract costs and estimated earnings in excess of billings as of December 31, 2020 during the year ending December 31, 2021.  

Billings in excess of construction contract costs and estimated earnings represent billings or collections on contracts made in advance of revenue recognized.

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The following table summarizes the changes to the balances in the Company’s construction contract costs and estimated earnings in excess of billings account and the billings in excess of construction contract costs and estimated earnings account for the year ended December 31, 2020 and 2019 (in thousands):
Year ended December 31, 2020Year ended December 31, 2019
Construction contract costs and estimated earnings in excess of billingsBillings in excess of construction contract costs and estimated earningsConstruction contract costs and estimated earnings in excess of billingsBillings in excess of construction contract costs and estimated earnings
Beginning balance$249 $5,306 $1,358 $3,037 
Revenue recognized that was included in the balance at the beginning of the period— (5,306)— (3,037)
Increases due to new billings, excluding amounts recognized as revenue during the period— 6,244 — 6,283 
Transferred to receivables(545)— (2,557)— 
Construction contract costs and estimated earnings not billed during the period138 — 249 — 
Changes due to cumulative catch-up adjustment arising from changes in the estimate of the stage of completion296 (156)1,199 (977)
Ending balance$138 $6,088 $249 $5,306 

The Company defers precontractpre-contract costs when such costs are directly associated with specific anticipated contracts and their recovery is probable. PrecontractPre-contract costs of $0.6$1.7 million and $1.5$0.9 million were deferred as of December 31, 20172020 and 2016,2019, respectively. Amortization of pre-contract costs for the years ended December 31, 2020 and 2019 was $0.8 million and $0.6 million, respectively.
 
Construction receivables and payables include retentions—amounts that are generally withheld until the completion of the contract or the satisfaction of certain restrictive conditions such as fulfillment guarantees. As of December 31, 20172020 and 2016,2019, construction receivables included retentions of $9.9$17.1 million and $11.5$9.0 million, respectively. The Company expects to collect substantially all construction receivables as of December 31, 20172020 during the year ending December 31, 2018.2021. As of December 31, 20172020 and 2016,2019, construction payables included retentions of $17.4$17.7 million and $14.6$18.0 million, respectively. The Company expects to pay substantially all construction payables as of December 31, 20172020 during the year ending December 31, 2018.2021.



The Company’s net position on uncompleted construction contracts comprised the following as of December 31, 20172020 and 20162019 (in thousands):
 
December 31,  December 31, 
2017 2016 20202019
Costs incurred on uncompleted construction contracts$520,368
 $333,744
Costs incurred on uncompleted construction contracts$905,037 $695,564 
Estimated earnings18,070
 10,936
Estimated earnings32,130 24,553 
Billings(541,784) (354,737)Billings(943,117)(725,174)
Net position$(3,346) $(10,057)Net position$(5,950)$(5,057)
Construction contract costs and estimated earnings in excess of billingsConstruction contract costs and estimated earnings in excess of billings$138 $249 
Billings in excess of construction contract costs and estimated earningsBillings in excess of construction contract costs and estimated earnings(6,088)(5,306)
Net positionNet position$(5,950)$(5,057)
 
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 December 31,
 2017 2016
Construction contract costs and estimated earnings in excess of billings$245
 $110
Billings in excess of construction contract costs and estimated earnings(3,591) (10,167)
Net position$(3,346) $(10,057)
The Company's balances and changes in construction contract price allocated to unsatisfied performance obligations (backlog) for each of the three years ended December 31, 2020, 2019 and 2018 were as follows (in thousands):
 Years Ended December 31, 
 202020192018
Beginning backlog$242,622 $165,863 $49,167 
New contracts/change orders45,882 182,495 192,852 
Work performed(217,246)(105,736)(76,156)
Ending backlog$71,258 $242,622 $165,863 

The Company expects to complete alla majority of the uncompleted contracts as of December 31, 20172020 during the years ending December 31, 2018 and 2019.next 12 to 18 months.  



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8.Indebtedness
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8.    Indebtedness

The Company’s indebtedness was comprised of the following as of December 31, 20172020 and 20162019 (dollars in thousands):  
   Stated Interest Stated Maturity
 Principal Balance Rate Date
 December 31,  December 31, 
 2017 2016 2017
North Point Center Note 5$—
 $643
 LIBOR + 2.00%
 February 1, 2017
Harrisonburg Regal—
 3,256
 6.06% June 8, 2017
Commonwealth of Virginia - Chesapeake—
 4,933
 LIBOR + 1.90%
 August 28, 2017
Sandbridge Commons (2)8,468
 9,376
 LIBOR + 1.75%
 January 17, 2018
Columbus Village Note 1 (1)6,080
 6,258
 LIBOR + 2.00%
 April 5, 2018
Columbus Village Note 22,218
 2,266
 LIBOR + 2.00%
 April 5, 2018
Johns Hopkins Village46,698
 43,841
 LIBOR + 1.90%
 July 30, 2018
Lightfoot Marketplace10,500
 12,194
 LIBOR + 1.75%
 November 14, 2018
North Point Note 19,571
 9,776
 6.45% February 5, 2019
Harding Place3,874
 —
 LIBOR + 2.95%
 February 24, 2020
Town Center Phase VI1,505
 —
 LIBOR + 3.50%
 June 29, 2020
Southgate Square20,708
 21,150
 LIBOR + 2.00%
 April 29, 2021
249 Central Park Retail (3)16,851
 17,076
 LIBOR + 1.95%
 August 8, 2021
Fountain Plaza Retail (3)10,145
 10,281
 LIBOR + 1.95%
 August 8, 2021
South Retail (3)7,394
 7,493
 LIBOR + 1.95%
 August 8, 2021
4525 Main Street (4)32,034
 32,034
 3.25% September 10, 2021
Encore Apartments (4)24,966
 24,966
 3.25% September 10, 2021
Revolving credit facility66,000
 107,000
 LIBOR+1.40%-2.00%
 October 26, 2021
Hanbury Village19,503
 20,709
 0.0378
 August 15, 2022
Term loan (1)50,000
 50,000
 LIBOR+1.35%-1.95%
 October 26, 2022
Term loan100,000
 50,000
 LIBOR+1.35%-1.95%
 October 26, 2022
Socastee Commons4,771
 4,866
 4.57% January 6, 2023
North Point Note 22,459
 2,564
 7.25% September 15, 2025
Smith's Landing19,764
 20,511
 4.05% June 1, 2035
Liberty Apartments14,694
 20,005
 5.66% November 1, 2043
The Cosmopolitan45,209
 45,884
 3.35% July 1, 2051
Total principal balance$523,412
 $527,082
    
Unamortized fair value adjustments(1,211) (1,250)    
Unamortized debt issuance costs(4,929) (3,652)    
Indebtedness, net$517,272
 $522,180
    
 Principal Balance
Interest Rate (a)
Maturity Date
 December 31, December 31, 
 202020192020
Secured Debt
Hanbury Village (b)
$0 $18,515 3.78 %August 15, 2022
Sandbridge Commons (c)
0 8,020 LIBOR + 1.75%January 17, 2023
Southgate Square19,682 20,562 LIBOR + 1.60% April 29, 2021
Nexton Square (d)
22,909 0 LIBOR + 2.25%August 8, 2021
Encore Apartments (d)(e)
24,337 24,842 3.25 % September 10, 2021
4525 Main Street (d)(e)
31,231 31,876 3.25 % September 10, 2021
Red Mill West10,851 11,296 4.23 % June 1, 2022
Thames Street Wharf70,000 70,000 LIBOR + 1.30%(h)June 26, 2022
Marketplace at Hilltop10,120 10,517 4.42 % October 1, 2022
1405 Point53,000 53,000 LIBOR + 2.25% January 1, 2023
Socastee Commons4,458 4,567 4.57 % January 6, 2023
Wills Wharf59,044 29,154 LIBOR + 2.25% June 26, 2023
249 Central Park Retail (f)
16,597 16,828 LIBOR + 1.60%(h)August 10, 2023
Fountain Plaza Retail (f)
9,988 10,127 LIBOR + 1.60%(h)August 10, 2023
South Retail (f)
7,287 7,388 LIBOR + 1.60%(h)August 10, 2023
Hoffler Place (g)
18,400 29,059 LIBOR + 2.60%January 1, 2024
Summit Place (g)
23,100 28,824 LIBOR + 2.60%January 1, 2024
One City Center24,712 25,286 LIBOR + 1.85% April 1, 2024
Red Mill Central2,363 2,538 4.80 % June 17, 2024
Solis Gainesville0 0 LIBOR + 3.00%August 31, 2024
Premier Apartments (i)
16,716 16,750 LIBOR + 1.55% October 31, 2024
Premier Retail (i)
8,241 8,250 LIBOR + 1.55% October 31, 2024
Red Mill South5,833 6,137 3.57 % May 1, 2025
Brooks Crossing Office15,393 14,411 LIBOR + 1.60% July 1, 2025
Market at Mill Creek13,789 14,727 LIBOR + 1.55% July 12, 2025
Johns Hopkins Village50,859 51,800 LIBOR + 1.25%(h)August 7, 2025
North Point Center Note 22,094 2,214 7.25 % September 15, 2025
Lexington Square14,440 14,696 4.50 % September 1, 2028
Red Mill North4,294 4,394 4.73 % December 31, 2028
Greenside Apartments33,310 34,000 3.17 % December 15, 2029
The Residences at Annapolis Junction84,375 0 SOFR + 2.66%November 1, 2030
Smith's Landing17,331 18,174 4.05 % June 1, 2035
Liberty Apartments13,877 14,165 5.66 % November 1, 2043
Edison Apartments16,272 0 5.30 %December 1, 2044
The Cosmopolitan42,909 43,702 3.35 % July 1, 2051
Total secured debt$747,812 $645,819 
Unsecured Debt
Senior unsecured revolving credit facility10,000 110,000 LIBOR+1.30%-1.85% January 24, 2024
Senior unsecured term loan19,500 44,500 LIBOR+1.25%-1.80% January 24, 2025
Senior unsecured term loan185,500 160,500 LIBOR+1.25%-1.80%(h)January 24, 2025
Total unsecured debt$215,000 $315,000 
Total principal balances$962,812 $960,819   
Unamortized GAAP adjustments(8,971)(10,282)  
Other note payable (j)
10,004 0   
Indebtedness, net$963,845 $950,537   

(1)Subject to an interest rate swap agreement.
(2)Subsequent to December 31, 2017, the Sandbridge Commons mortgage was extended for an additional 5 years.
(3)Cross collateralized.
(4)Cross collateralized.

(a) LIBOR and SOFR rates are determined by individual lenders.

(b) On September 22, 2020, Hanbury Village Note was paid off.
(c) On October 6, 2020, Sandbridge Commons Note was paid off.
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(d) Refinanced subsequent to year end.
(e) Cross collateralized.
(f) Cross collateralized.
(g) Cross collateralized.
(h) Includes debt subject to interest rate swap agreements.
(i) Cross collateralized.
(j) Represents the fair value of additional ground lease payments at 1405 Point over the approximately 42-year remaining lease term and an earn-out liability for the Gainesville development project.

The Company’s indebtedness was comprised of the following fixed and variable-rate debt as of December 31, 20172020 and 20162019 (in thousands):
December 31,  December 31, 
2017 2016 20202019
Fixed-rate debt$229,051
 $241,472
Fixed-rate debt$573,951 $488,276 
Variable-rate debt294,361
 285,610
Variable-rate debt388,861 472,543 
Total principal balance$523,412
 $527,082
Total principal balance$962,812 $960,819 
 
Certain loans require the Company to comply with various financial and other covenants, including the maintenance of minimum debt coverage ratios. As of December 31, 2017,2020, the Company was in compliance with all loan covenants.
 
Scheduled principal repayments and maturities during each of the next five years and thereafter are as follows (in thousands):
Year Ending December 31,Scheduled Principal PaymentsMaturitiesTotal Payments
2021$10,682 $97,151 $107,833 
20229,667 89,570 99,237 
20239,060 147,320 156,380 
20249,346 98,918 108,264 
20257,539 279,107 286,646 
Thereafter91,356 113,096 204,452 
Total (1)
$137,650 $825,162 $962,812 

(1)Debt principal payments and maturities exclude increased ground lease payments at 1405 Point and accrued earn-out payments to the Company’s joint venture partner at Gainesville, each of which is classified as notes payable in the Company's consolidated balance sheets.
YearScheduled Principal Payments Maturities Total Payments
2018$4,361
 $73,322
 $77,683
20193,951
 9,333
 13,284
20204,959
 5,379
 10,338
20214,073
 172,274
 176,347
20222,699
 167,109
 169,808
Thereafter70,385
 5,567
 75,952
Total$90,428
 $432,984
 $523,412


Credit Facility
 
On October 26, 2017, the Operating Partnership entered into anThe Company has a senior credit facility that was amended and restated credit agreement (the “amended credit agreement”),on October 3, 2019, which provides for a $300.0$355.0 million credit facility comprised of a $150.0 million senior unsecured revolving credit facility (the "revolving credit facility") and a $150.0$205.0 million senior unsecured term loan facility (the “term"term loan facility”facility" and, together with the revolving credit facility, the “credit facility”"credit facility"), with a syndicate of banks. The amended credit facility replaces the prior $150.0 million revolving credit facility, which was scheduled to mature on February 20, 2019, and the prior $125.0 million term loan facility, which was scheduled to mature on February 20, 2021.


The credit facility includes an accordion feature that allows the total commitments to be increased to $450.0$700.0 million, subject to certain conditions, including obtaining commitments from any one or more lenders. The revolving credit facility has a scheduled maturity date of October 26, 2021,January 24, 2024, with two2 six-month extension options, subject to certain conditions, including payment of a 0.075% extension fee at each extension. The term loan facility has a scheduled maturity date of October 26, 2022.January 24, 2025.


The revolving credit facility bears interest at LIBOR (the London Inter-Bank Offered Rate) plus a margin ranging from 1.40%1.30% to 2.00%1.85%, and the term loan facility bears interest at LIBOR plus a margin ranging from 1.35%1.25% to 1.95%1.80%, in each case depending on the Company's total leverage. The Company is also obligated to pay an unused commitment fee of 15 or 25 basis points on the unused portions of the commitments under the revolving credit facility, depending on the amount of borrowings under the credit facility. As of December 31, 2017,2020, the interest rates on the revolving credit facility and the term loan facility were 3.11%1.64% and 3.06%1.59%, respectively. If the Company attains investment grade
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credit ratings from S&P and Moody’s, the Operating Partnership may elect to have borrowings become subject to interest rates based on such credit ratings. The Company may, at any time, voluntarily prepay any loan under the credit facility in whole or in part without premium or penalty.


The Operating Partnership is the borrower under the credit facility, and its obligations under the credit facility are guaranteed by the Company and certain of its subsidiaries that are not otherwise prohibited from providing such guaranty. The credit agreement contains customary representations and warranties and financial and other affirmative

and negative covenants. The Company's ability to borrow under the credit facility is subject to ongoing compliance with a number of financial covenants, affirmative covenants, and other restrictions. The credit agreement includes customary events of default, in certain cases subject to customary cure periods. The occurrence of an event of default, if not cured within the applicable cure period, would permit the lenders to, among other things, declare the unpaid principal, accrued and unpaid interest, and all other amounts payable under the credit facility to be immediately due and payable.


The Company is currently in compliance with all covenants under the credit facility.agreement.

Other 20172020 Financing Activity


In June 2020, the Company exercised its option to purchase the remaining 21% ownership interest in 1405 Point in exchange for increased ground lease payments to be made over the approximately 42-year remaining lease term. The Company recorded a note payable of $6.1 million, which represents the present value of these payments. The ground lessor is an affiliate of our former joint venture partner.

On February 1, 2017, the Company paid off the North Point Center Note 5 in full for $0.6 million.

On February 24, 2017, the Company secured a $29.8 million construction loan for the Harding Place project in Charlotte, North Carolina.

On April 7, 2017, the Company paid off the Harrisonburg Regal note in full for $3.2 million.

On April 19, 2017,August 31, 2020, the Company entered into a second amendment to the credit$31.4 million construction loan agreement for the Lightfoot Marketplace loan, which amended certain definitions and covenant requirements.

On June 29, 2017, the Company secured a $27.9 million construction loan for the Town Center Phase VIdevelopment project in Virginia Beach, Virginia.

On July 13, 2017, the Company paid off the remaining balance of $4.9 million for the note securedowned by the Commonwealth of Virginia building in Chesapeake, Virginia in conjunction with the sale of this property.

On August 9, 2017, the Company refinanced the Hanbury Village note. The new note matures in August 2022 and has a fixed annual interest rate of 3.78%.

On August 10, 2017, the Company paid off $0.7 million of the Sandbridge Commons note in conjunction with the sale of a land outparcel at this property.

On September 1, 2017, the Company entered into a modification of The Cosmopolitan note, which reduced the interest rate from 3.75% to 3.35%.

On October 13, 2017, the Company paid down $5.0 million of the Liberty Apartments note.

On November 1, 2017, the Company extended the Lightfoot construction loan after paying the balance down to $10.5 million and paying an extension fee. The loan is now set to mature in November 2018.

On December 28, 2017, the Company secured a $66.5 million construction loan for the 595 King Street and 530 Meeting Street development projects. There are no borrowings on this loan as of December 31, 2017.

During the year ended December 31, 2017, the Company borrowed $8.9 million under its construction loans to fund new development and construction.

Subsequent to December 31, 2017

On January 22, 2018, the Company extended the Sandbridge Commons mortgage.Gainesville Partnership. The loan bears interest at a rate of LIBOR plus a spread of 1.75%3.00% (LIBOR has a floor of 0.75%). The loan matures on August 31, 2024 and has one 12-month extension option. The Company's joint venture partner in the Gainesville Partnership has guaranteed payment of 55% of loan advances.

On September 22, 2020, as a part of the Nexton Square acquisition, the Company assumed a note payable of $22.9 million. The loan bears interest at a rate of LIBOR plus a spread of 2.25% and will mature on August 8, 2021.

On September 22, 2020, the Company paid off the Hanbury Village loan in full. This property was added to the unencumbered borrowing base for the revolving credit facility.

On October 1, 2020, the Company assumed a $16.4 million loan payable with the acquisition of Edison Apartments, a multifamily property located in downtown Richmond, Virginia

On October 6, 2020, the Company paid off the Sandbridge Commons loan in full. This property was added to the unencumbered borrowing base for the revolving credit facility.

On October 30, 2020, as part of the acquisition of The Residences at Annapolis Junction, the Company assumed an $83.4 million senior loan, which was immediately refinanced with a new $84.4 million loan. This new loan bears interest at a rate of SOFR plus a spread of 2.66% and will mature on November 1, 2030.

On December 22, 2020, the Company refinanced the Summit Place loan. The Company decreased the balance to $23.1 million by paying down $11.5 million. The loan bears interest at a rate of LIBOR plus a spread of 2.60% (LIBOR has a 0.40% floor) and will mature on January 17, 2023.1, 2024.


On December 22, 2020, the Company refinanced the Hoffler Place loan. The Company decreased the balance to $18.4 million by paying down $12.8 million. The loan bears interest at a rate of LIBOR plus a spread of 2.60% (LIBOR has a 0.40% floor) and will mature on January 1, 2024.

In January 2018,April 2020, the Company increased its borrowings underproactively obtained a waiver from the revolving credit facility by $58.0 million.


Other 2016 Financing Activity

On August 8, 2016,lender for the Premier Retail/Apartments property wherein it did not have to meet the minimum debt service coverage requirement for the period ended June 30, 2020. The Company repaidalso proactively obtained a waiver from the existing $15.1 million mortgage loan secured bylender for the 249 Central Park, Fountain Plaza Retail, the $6.7 million mortgage loan onand South Retail properties wherein it did not have to meet the minimum debt service coverage requirement for the periods ended June 30, 2020 and the $7.6 million mortgage loan on Fountain Plaza and refinanced them with a $35.0 million five-year term mortgage loan that bears interest at LIBOR plus 1.95% and matures on August 8, 2021. The new mortgage loan is collateralized by all three properties. The loss on extinguishmentDecember 31, 2020. As of debt recognized on the refinancing was less than $0.1 million.

On August 30, 2016,December 31, 2020, the Company repaidwas in compliance with all covenants on its outstanding indebtedness after giving effect to the existing $31.6 million construction loan secured by 4525 Main Street and the $25.2 million construction loan on Encore Apartments and refinanced them with a $57.0 million five-year term mortgage loan that bears interest at 3.25% and matures on September 10, 2021. The new mortgage is collateralized by both properties. The loss on extinguishmentwaivers granted.

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Table of debt recognized on the refinancing was less than $0.1 million for the year ended December 31, 2016.Contents

During the year ended December 31, 2016,2020, the Company borrowed $44.4$39.7 million under its existing construction loans to fund new development and construction.

Other 20152019 Financing Activity

On January 31, 2019, the Company paid off North Point Center Note 1.

On March 11, 2019, the Company received $7.4 million of additional funding on the loan secured by Lightfoot Marketplace. On August 15, 2019, the Company sold the property and paid off the outstanding balance of $17.9 million. The Company retained the interest rate swap associated with the loan.

On March 14, 2019, the Company obtained a loan secured by One City Center in the amount of $25.6 million in conjunction with the acquisition of this property. This loan may be increased to $27.6 million subject to certain conditions. The loan bears interest at a rate of LIBOR plus a spread of 1.85% and will mature on April 1, 2024.

On April 24, 2019, the Company exercised its option to purchase 79% of the partnership that owns 1405 Point in exchange for extinguishing its note receivable on the project and a cash payment of $0.3 million. The project was acquired subject to a loan payable of $64.9 million, which was recorded at its fair value of $65.8 million. On December 27, 2019, the Company extended and modified the 1405 Point loan. The Company decreased the balance on the loan to $53.0 million by paying the balance of $12.3 million. The loan matures on January 1, 2023 and bears interest at a rate of LIBOR plus a spread of 2.25%; this spread will decrease to 2.00% upon achieving Debt Yield of 8.5% and further to 1.75% upon achieving Debt Yield of 9.5% (as defined in the loan agreement).

On May 20, 2015, the Company repaid the $17.8 million construction loan secured by Whetstone Apartments and recognized a loss on extinguishment of debt of $0.1 million representing unamortized debt issuance costs.
On May 27, 2015, the Company repaid the existing $24.4 million mortgage secured by Smith’s Landing and refinanced the property with a new $21.6 million loan that bears interest at 4.05% and matures on June 1, 2035. As a result of the refinancing, the Company recognized a $0.1 million loss on extinguishment of debt representing the unamortized debt issuance costs associated with the repaid mortgage.

On July 1, 2015,23, 2019, the Company assumed debt with an outstanding principal balance of $5.0 millionnotes payable in connection with the acquisition of Socastee Commons.Red Mill Commons and Marketplace at Hilltop with outstanding principal balances of $24.9 million and $10.8 million, respectively. The mortgage bearsfollowing table summarizes the note balance at assumption, fair value at assumption, maturity date, and interest at 4.57% and matures on January 6, 2023.rate for each loan ($ in thousands):
Loan nameNote balance at assumptionFair value of loan at assumptionLoan maturity dateLoan interest rate
Red Mill North$4,451 $4,520 12/31/20284.73 %
Red Mill South6,310 6,090 5/1/20253.57 %
Red Mill Central2,640 2,690 6/17/20244.80 %
Red Mill West11,548 11,540 6/1/20224.23 %
Marketplace at Hilltop10,740 10,790 10/1/20224.42 %
$35,689 $35,630 

On July 10, 2015,June 26, 2019, the Company assumed two loans with an aggregate outstanding principal balanceobtained a loan secured by Thames Street Wharf in the amount of $8.8$70.0 million in connectionconjunction with the acquisition of Columbus Village. Both loans bearthis property. The loan bears interest at a rate of LIBOR plus 2.00%a spread of 1.30% and will mature on April 5, 2018.June 26, 2022.

On July 30, 2015,June 26, 2019, the Company entered into a $50.0$76.0 million syndicated construction loan agreementfacility for the Wills Wharf development project in Baltimore, Maryland. The facility bears interest at a rate of LIBOR plus a spread of 2.25% during construction activities and will mature on June 26, 2023.

On October 29, 2019, the Company extended and modified the Premier loan. The Company increased the balance on the loan to fund the development and construction$25.0 million by receiving additional proceeds of Johns Hopkins Village.$2.7 million. The construction loan bears interest at a rate of LIBOR plus 1.90%a spread of 1.55% and matureswill mature on July 30, 2018.October 31, 2024.

On December 12, 2019, the Company refinanced the Greenside loan. The Company increased the balance to $34.0 million by receiving additional proceeds of $5.1 million. The loan bears interest at a rate of 3.17% and will mature on December 15, 2029.

During the year ended December 31, 2019, the Company borrowed $96.3 million under its construction loans to fund development and construction.
 
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Other 2018 Financing Activity

On September 1, 2015,January 22, 2018, the Company repaidextended and modified the $6.1 million mortgage secured by the Oyster Point office building.
Sandbridge Commons note. The note bore interest at a rate of LIBOR plus a spread of 1.75%. On October 6, 2015,2020, the Operating PartnershipCompany paid off the Sandbridge Commons note in full.

On March 27, 2018, the Company paid off Columbus Village Note 1 and Columbus Village Note 2 in full for an aggregate amount of $8.3 million.

On May 31, 2018, the Company modified the Southgate Square note. The principal amount of the note was increased to $22.0 million, and the note now bears interest at a rate of LIBOR plus a spread of 1.60%. This note will still mature on April 29, 2021.

On June 1, 2018, the Company entered into a $6.4$16.3 million construction loan for the River City industrial facility in Chesterfield, Virginia. The loan bore interest at a rate of LIBOR plus a spread of 1.50%. On December 20, 2018, the Company sold the completed facility and paid the loan in full.

On June 14, 2018, the Company extended and modified the note secured by 249 Central Park Retail, Fountain Plaza Retail, and South Retail. The principal amount of the note was increased to $35.0 million. The note bears interest at a rate of LIBOR plus a spread of 1.60% and will mature on August 10, 2023.

On June 29, 2018, the Company entered into a $15.6 million construction loan for the Brooks Crossing Office development project. The loan bears interest at a rate of LIBOR plus a spread of 1.60% and will mature on July 1, 2025.

On July 12, 2018, the Company entered into a $16.2 million construction loan for the Market at Mill Creek development project in Mt. Pleasant, South Carolina. The loan bears interest at a rate of LIBOR plus a spread of 1.55% and will mature on July 12, 2025.

On July 27, 2018, the Company paid off the Johns Hopkins Village note and entered into a new loan. The principal amount of the new loan is $53.0 million. The loan bears interest at a rate of LIBOR plus a spread of 1.25% and will mature on August 7, 2025. The Company simultaneously entered into an interest rate swap agreement that effectively fixes the interest rate at 4.19% for the term of the loan.

On August 28, 2018, the Company entered into a $15.0 million note secured by the Oyster Point office building, whichnewly acquired Lexington Square shopping center. The note bears interest at a rate of 4.50% and will mature on September 1, 2028.

On October 12, 2018, the Company extended and modified the note secured by Lightfoot Marketplace. The Company borrowed an initial tranche of $10.5 million on this note, which bore interest at a rate of LIBOR plus 1.40% to 2.00% and matures on February 28, 2017. Thisa spread of 1.75%. The Company simultaneously entered into an interest rate swap agreement that effectively fixed the interest rate of the initial tranche at 4.77% per annum. On March 11, 2019, the Company received $7.4 million of additional funding under this note. On August 15, 2019, the Company paid off the $17.9 million outstanding balance of the note was paid in full in conjunction with the sale of the Oyster Point office building.property.

During the year ended December 31, 2018, the Company borrowed $86.9 million under its existing construction loans to fund new development and construction and repaid $10.5 million in conjunction with the sale of the River City industrial facility.

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9.    Derivative Financial Instruments
 
On October 30, 2015,During the three years ended December 31, 2020, the Company repaidhad the $18.7 million construction loan secured by the Oceaneering International buildingfollowing LIBOR and recognized a loss on debt extinguishment of debt of $0.1 million representing unamortized debt issuance costs.

9.Derivative Financial Instruments
On February 20, 2015, the Operating Partnership entered into a $50.0 million floating-to-fixedSOFR interest rate swap attributable to one-month LIBOR indexed interest payments. The $50.0 million interest rate swap has a fixed rate of 2.00%, an effective date of March 1, 2016 and a maturity date of February 20, 2020. The Operating Partnership entered into this interest rate swap agreementcaps ($ in connection with the $50.0 million senior unsecured term loan facility that bears interest at LIBOR plus 1.35% to 1.95%, depending on the Operating Partnership’s total leverage. The Company designated this interest rate swapthousands):
Effective DateMaturity DateNotional Amount LIBOR Strike RateSOFR Strike RatePremium Paid
2/25/20163/1/2018$75,000 1.50 %N/A$57 
6/17/20166/17/201870,000 1.00 %N/A150 
2/7/20173/1/201950,000 1.50 %N/A187 
6/23/20177/1/201950,000 1.50 %N/A154 
9/18/201710/1/201950,000 1.50 %N/A199 
11/28/201712/1/201950,000 1.50 %N/A359 
3/7/20184/1/202050,000 2.25 %N/A310 
7/16/20188/1/202050,000 2.50 %N/A319 
12/11/20181/1/202150,000 2.75 %N/A210 
5/15/20196/1/2022100,000 2.50 %N/A288 
1/10/20202/1/202250,000 (a)1.75 %N/A87 
1/28/20202/1/202250,000 (a)1.75 %N/A62 
3/2/20203/1/2022100,000 (a)1.50 %N/A111 
7/1/20207/1/2023100,000 (a)0.50 %N/A232 
11/1/202011/1/202384,375 (a)N/A1.84 %91 
$2,816 

(a) Designated as a cash flow hedgehedge.

As of variable interest payments based on one-month LIBOR.

On July 13, 2015,December 31, 2020, the Operating Partnership entered into a $6.5 millionCompany held the following floating-to-fixed interest rate swap attributable to one-month LIBOR indexed interest payments. The $6.5 millionswaps ($ in thousands):
Related DebtNotional AmountIndexSwap Fixed RateDebt effective rateEffective DateExpiration Date
Senior unsecured term loan$50,000 1-month LIBOR2.78 %4.23 %5/1/20185/1/2023
John Hopkins Village50,859 (a)1-month LIBOR2.94 %4.19 %8/7/20188/7/2025
Senior unsecured term loan10,500 (a)1-month LIBOR3.02 %4.47 %10/12/201810/12/2023
249 Central Park Retail, South Retail, and Fountain Plaza Retail33,872 (a)1-month LIBOR2.25 %3.85 %4/1/20198/10/2023
Senior unsecured term loan50,000 (a)1-month LIBOR2.26 %3.71 %4/1/201910/26/2022
Thames Street Wharf70,000 (a)1-month LIBOR0.51 %1.81 %3/26/20206/26/2024
Senior unsecured term loan25,000 (a)1-month LIBOR0.50 %1.95 %4/1/20204/1/2024
Senior unsecured term loan25,000 (a)1-month LIBOR0.50 %1.95 %4/1/20204/1/2024
Senior unsecured term loan25,000 (a)1-month LIBOR0.55 %2.00 %4/1/20204/1/2024
Total$340,231 

(a) Designated as a cash flow hedge.

For the interest rate swap has a fixed rate of 3.05%, an

effective date of July 13, 2015 and a maturity date of April 5, 2018. The Companyswaps designated this interest rate swap as a cash flow hedgehedges, realized losses are reclassified out of variableaccumulated other comprehensive loss to interest expense in the Consolidated Statements of Comprehensive Income due to payments based on one-month LIBOR.made to the swap counterparty. During the next 12 months, the Company anticipates reclassifying approximately $4.3 million of net hedging losses from accumulated other comprehensive loss into earnings to offset the variability of the hedged items during this period.
On October 26, 2015, the Operating Partnership entered into a LIBOR interest rate cap agreement on a notional amount of $75.0 million at a strike rate of 1.25% for a premium of $0.1 million. The interest rate cap agreement expired on October 15, 2017.
On February 25, 2016, the Operating Partnership entered into a LIBOR interest rate cap agreement on a notional amount of $75.0 million at a strike rate of 1.50% for a premium of less than $0.1 million.  The interest rate cap agreement expires on March 1, 2018.

On June 17, 2016, the Operating Partnership entered into a LIBOR interest rate cap agreement on a notional amount of $70.0 million at a strike rate of 1.00% for a premium of less than $0.1 million. The interest rate cap agreement expires on June 17, 2018.

On February 7, 2017, the Operating Partnership entered into a LIBOR interest rate cap agreement on a notional amount of $50.0 million at a strike rate of 1.50% for a premium of $0.2 million. The interest rate cap expires on March 1, 2019.

On June 23, 2017, the Operating Partnership entered into a LIBOR interest rate cap agreement on a notional amount of $50.0 million at a strike rate of 1.50% for a premium of less than $0.2 million. The interest rate cap agreement expires on July 1, 2019.
On September 18, 2017, the Operating Partnership entered into a LIBOR interest rate cap agreement on a notional amount of $50.0 million at a strike rate of 1.50% for a premium of less than $0.2 million. The interest rate cap agreement expires on October 1, 2019.

On November 28, 2017, the Operating Partnership entered into a LIBOR interest rate cap agreement on a notional amount of $50.0 million at a strike rate of 1.50% for a premium of less than $0.4 million. The interest rate cap agreement expires on December 1, 2019.


The Company’s derivatives comprised the following as of December 31, 20172020 and 20162019 (in thousands):
 
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December 31, 2020December 31, 2019
December 31,  Fair ValueFair Value
2017 2016Notional AmountAssetLiabilityNotional AmountAssetLiability
Notional Fair Value Notional Fair Value
Amount Asset Liability Amount Asset Liability
Derivatives not designated as accounting hedgesDerivatives not designated as accounting hedges
Interest rate swaps$56,079
 $10
 $(69) $56,901
 $—
 $(829)Interest rate swaps$50,000 $0 $(3,056)$100,000 $0 $(1,992)
Interest rate caps345,000
 1,515
 —
 270,000
 259
 —
Interest rate caps150,000 4 0 250,000 25 0 
Total$401,079
 $1,525
 $(69) $326,901
 $259
 $(829)
Total derivatives not designated as accounting hedgesTotal derivatives not designated as accounting hedges200,000 4 (3,056)350,000 25 (1,992)
Derivatives designated as accounting hedgesDerivatives designated as accounting hedges
Interest rate swapsInterest rate swaps290,231 0 (11,797)146,642 0 (5,728)
Interest rate capsInterest rate caps384,375 86 0 0 0 0 
Total derivativesTotal derivatives$874,606 $90 $(14,853)$496,642 $25 $(7,720)
 
The changes in the fair value of the Company’s derivatives during the years ended December 31, 2017, 2016,2020, 2019, and 20152018 was as follows (in thousands):
 Years Ended December 31, 
 2017 2016 2015
Interest rate swaps$770
 $(795) $(1,071)
Interest rate caps357
 (146) (233)
Total$1,127
 $(941) $(1,304)
Comprehensive income statement presentation: 
  
  
Change in fair value of interest rate derivatives$1,127
 $(941) $(229)
Unrealized gain (loss) on cash flow hedge—
 —
 (1,075)
Total$1,127
 $(941) $(1,304)
 Years Ended December 31, 
 202020192018
Interest rate swaps$(10,318)$(6,050)$(2,281)
Interest rate caps(518)(2,053)(564)
Total change in fair value of interest rate derivatives$(10,836)$(8,103)$(2,845)
Comprehensive income statement presentation:   
Change in fair value of derivatives and other$(1,085)$(3,599)$(951)
Unrealized cash flow hedge losses(9,751)(4,504)(1,894)
Total change in fair value of interest rate derivatives$(10,836)$(8,103)$(2,845)
 

Effective March 31, 2016, the Company determined that the short-cut method of hedge accounting was not appropriate for two of its interest-rate swaps and, for accounting purposes, the hedge relationship was terminated. The swaps were entered into in February and July 2015. Accordingly, changes in fair value of the swap should have been recorded in income rather than other comprehensive income. The Company determined that the errors were immaterial to all previously issued financial statements. The Company recognized $0.7 million of accumulated other comprehensive income and $0.4 million, which was previously allocated to noncontrolling interest as of December 31, 2015, in earnings during the first quarter of 2016. Subsequent changes in the value of the interest rate swap for the period from January 1, 2016 to December 31, 2017 were also recognized in earnings during the years ended December 31, 2017 and 2016. Net income for the year ended December 31, 2015 was overstated by $1.0 million. In reaching its conclusions, management considered the nature of the error, the effect of the error on operating results for 2015, and the effects of the error on important financial statement measures, including related trends.   10.    Equity

The Company has not designated any of its interest rate caps as hedging instruments under GAAP.

10.Equity
 
Stockholders’ Equity
 
As of December 31, 20172020 and 2016,2019, the Company’s authorized capital was 500 million shares of common stock and 100 million shares of preferred stock. The Company had 44.959.1 million and 37.556.3 million shares of common stock issued and outstanding as of December 31, 20172020 and 2016,2019, respectively. NoThe Company had 6.8 million and 2.5 million shares of preferred stock wereits Series A Preferred Stock (as defined below) issued and outstanding as of December 31, 20172020 and 2016.2019, respectively.


Common Stock

On April 8, 2015, the Company issued 415,500 shares of common stock in a private placement as partial consideration for the acquisition of Perry Hall Marketplace.

On May 5, 2015,February 26, 2018, the Company commenced an at-the-market continuous equity offering program (the "2018 ATM Program") through which the Company was ablemay, from time to time, issue and sell shares of its common stock. Upon commencing the 2018 ATM Program, the Company simultaneously terminated the 2016 ATM Program. On August 6, 2019, the Company entered into amendments (the "Amendments") to the separate sales agreements related to the 2018 ATM Program, which, among other things, increased the aggregate offering price of shares of the Company’s common stock under the ATM Program from $125.0 million to $180.7 million. During the years ended December 31, 2020 and 2019, the Company issued and sold 92,577 and 5,871,519 shares of common stock at a weighted average price of $18.23 and $16.76 per share under the 2018 ATM Program, receiving net proceeds after offering costs and commissions of $1.7 million and $97.0 million, respectively.

On March 10, 2020, the Company commenced a new at-the-market continuous equity offering program (the "ATM Program") through which the Company may, from time to time, issue and sell shares of its common stock and shares of its 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock (the "Series A Preferred Stock") having an aggregate offering price of up to $50.0$300.0 million, (the "2015 ATM Program"). During the years ended December 31, 2016to or through its sales agents and, 2015, the Company issued and sold 1,152,919 and 1,108,149with respect to shares of its
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common stock, at weighted average prices of $10.87 and $10.26 per share, resulting in net proceedsmay enter into separate forward sales agreements to or through the Company after offering costs and commissions of $12.2 million and $10.9 million, respectively.

On December 9, 2015, the Company completed an underwritten public offering of 3,450,000 shares of common stock. The net proceeds to the Company after deducting the underwriting discount and related offering costs were $35.1 million.

On May 4, 2016, the Company commenced a new at-the-market continuous equity offering program (the “2016 ATM Program”) through which the Company was able to, from time to time, issue and sell shares of its common stock having an aggregate offering price of up to $75.0 million.forward purchaser. Upon commencing the 2016 ATM Program, the Company simultaneously terminated the Prior2018 ATM Program. During the yearsyear ended December 31, 2017 and 2016,2020, the Company issued and sold 450,890 and 4,159,9361,783,768 shares of common stock at a weighted average price of $14.08 and $13.45$10.48 per share under the 2016 ATM Program, receiving net proceeds, after offering costs and commissions, of $6.2 million and $54.8 million, respectively.

On October 13, 2016,$18.4 million. During the year ended December 31, 2020, the Company completed the acquisition of Columbus Village II, a stabilized retail asset for aggregate consideration of 2,000,000issued and sold 713,418 shares of common stock, which based on the closing stock price on the date of the acquisition, resulting in an acquisitionSeries A Preferred Stock at a weighted average price of $26.2 million. On October 19, 2016, the Company filed a registration statement covering resales of the shares pursuant to a registration rights agreement with the sellers.

On May 12, 2017, the Company completed an underwritten public offering of 6,900,000 shares of common stock at a public offering price of $13.00$22.88 per share which resulted in(inclusive of accrued dividends) under the ATM Program, receiving net proceeds, after offering costs and commissions, of $85.3$16.1 million.



Preferred Stock

On June 18, 2019, the Company issued 2,530,000 shares of its 6.75% Series A Cumulative Redeemable Noncontrolling InterestsPerpetual Preferred Stock, $0.01 par value per share ("Series A Preferred Stock"), with a liquidation preference of $25.00 per share, which included 330,000 shares issued upon the underwriters’ full exercise of their option to purchase additional shares. Net proceeds from the offering, after the underwriting discount but before offering expenses payable by the Company, were approximately $61.3 million. The Company used the net proceeds to fund a portion of the purchase price of Thames Street Wharf, a 263,426 square foot office building located in the Harbor Point neighborhood of Baltimore, Maryland. The balance of the net proceeds was used to repay a portion of the outstanding borrowings under the Company’s unsecured revolving credit facility and for general corporate purposes.


In connection with the issuance of the Series A Preferred Stock, on June 18, 2019, the Operating Partnership issued to the Company 2,530,000 6.75% Series A Cumulative Redeemable Perpetual Preferred Units (the "Series A Preferred Units"), which have economic terms that are identical to the Company’s Series A Preferred Stock. The former noncontrolling interest holderSeries A Preferred Units were issued in exchange for the Company’s contribution of Johns Hopkins Village had anthe net proceeds from the offering of the Series A Preferred Stock to the Operating Partnership.

On August 20, 2020, the Company sold 3,600,000 shares of its Series A Preferred Stock at a public offering price of $24.75 per share (inclusive of accrued dividends), for net proceeds, after the underwriting discount and offering expenses payable by the Company, of approximately $86.1 million, pursuant to a prospectus supplement, dated August 13, 2020, and a base prospectus dated March 9, 2020. The offering was a re-opening of the Company’s previous issuances of Series A Preferred Stock. The additional shares of Series A Preferred Stock sold in the offering form a single series, and are fully fungible, with the other outstanding shares of Series A Preferred Stock. The Company used the net proceeds to repay a portion of the outstanding borrowings under the Company’s unsecured revolving credit facility and for general corporate purposes.

In connection with the issuance of the Series A Preferred Stock, on August 20, 2020, the Operating Partnership issued to the Company 3,600,000 6.75% Series A Cumulative Redeemable Perpetual Preferred Units (the "Series A Preferred Units"), which have economic terms that are identical to the Series A Preferred Stock. The Series A Preferred Units were issued in exchange for the Company’s contribution of the net proceeds from the offering of the Series A Preferred Stock to the Operating Partnership.

Dividends on the Series A Preferred Stock are payable quarterly in arrears on or about the 15th day of each January, April, July and October. The first dividend on the Series A Preferred Stock was paid on October 15, 2019. The Series A Preferred Stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, the Series A Preferred Stock will rank senior to the Company's common stock with respect to the payment of distributions and other amounts. Except in instances relating to preservation of the Company's qualification as a REIT or pursuant to the Company’s special optional redemption right, the Series A Preferred Stock is not redeemable prior to June 18, 2024. On and after June 18, 2024, the Company may, at its option, redeem the Series A Preferred Stock, in whole, at any time, or in part, from time to time, for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but excluding, the redemption date.

Upon the occurrence of a change of control (as defined in the articles supplementary designating the terms of the Series A Preferred Stock), the Company has a special optional redemption right that enables it to redeem the 20% noncontrolling interestSeries A Preferred Stock, in that entity.whole or in part and within 120 days after the first date on which a change of control has occurred resulting in neither the Company nor the surviving entity having a class of common stock listed on the New York Stock Exchange, NYSE American, or NASDAQ or the acquisition of beneficial ownership of its stock entitling a person to exercise more than 50% of the total voting power of all our stock entitled to vote generally in election of directors. The noncontrolling interestspecial optional redemption price is $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but excluding, the date of $2.0 million wasredemption.
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Upon the occurrence of a change of control, holders will have the right (unless the Company has elected to exercise its
special optional redemption right to redeem their Series A Preferred Stock) to convert some or all of such holder’s Series A Preferred Stock into a number of shares of the Company's common stock equal to the lesser of:

•the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference plus the amount of any accrued and unpaid distributions to, but not including, the change of control conversion date (unless the change of control conversion date is after a record date for a Series A Preferred Stock distribution payment and prior to the corresponding Series A Preferred Stock distribution payment date, in which case no additional amount for such accrued and unpaid distribution will be included in temporary equity. On December 21, 2017,this sum) by (ii) the Company redeemedCommon Stock Price (as defined in the noncontrolling interestarticles supplementary designating the terms of the Series A Preferred Stock); and

•2.97796 (i.e., the Share Cap), subject to certain adjustments;

subject, in each case, to certain adjustments and provisions for a cash paymentthe receipt of $2.0 million and contingent futurealternative consideration of $0.5 million to be paidequivalent value as described in Class A Unitsthe articles supplementary designating the terms of the Operating Partnership upon the satisfaction of certain conditions. The contingent future consideration of $0.5 million has been recorded in accounts payable and accrued liabilities on the Company's consolidated balance sheets.Series A Preferred Stock.
 
Noncontrolling Interests
 
As of December 31, 20172020 and 2016,2019, the Company held a 72.0%73.9% and 68.1%72.6% common interest in the Operating Partnership, respectively. As of December 31, 2020, the sole general partnerCompany also held a preferred interest in the Operating Partnership in the form of preferred units with a liquidation preference of $171.1 million. The Company is the primary beneficiary of the Operating Partnership as it has the power to direct the activities of the Operating Partnership and the majority interest holder,rights to absorb 73.9% of the net income of the Operating Partnership. As the primary beneficiary, the Company consolidates the financial position and results of operations of the Operating Partnership. Noncontrolling interests in the Company represent OP Unitsunits of limited partnership interest in the Operating Partnership not held by the Company. As of December 31, 2020, there were 20,865,485 Class A Units of limited partnership interest in the Operating partnership not held by the Company. The Company's financial position and results of operations are the same as those of the Operating Partnership.

As partial consideration for Columbus Village,Additionally, the Operating Partnership issued 1,000,000 Class B Units on July 10, 2015owns a majority interest in certain non-wholly-owned operating and issued 275,000 Class C Units on January 10, 2017.development properties. The Class B Unitsnoncontrolling interest for investment entities of $0.5 million relates to the minority partners' interest in certain joint venture entities as of December 31, 2020, including Hoffler Place, The Residences at Annapolis Junction, and Class C Units did not earnSummit Place. The noncontrolling interest for the consolidated entities under development or accrue distributions until July 10, 2017 and January 10, 2018, respectively, at which time they automatically converted to Class A Units.construction was $4.5 million as of December 31, 2019.


On January 10, 2017, the Operating Partnership issued 68,691 Class A Units to acquire the remaining 20% interest in the Town Center Phase VI project.

On October 2, 2017,July 1, 2020, due to the request of holders of Class A Units to tendertendering an aggregate 358,879of 756,697 Class A Units for redemption by the Operating Partnership, the Company elected to satisfy the redemption requests withthrough the issuance of an aggregate cash paymentequal number of $4.9 million.shares of common stock.


As partial consideration for the acquisition of Edison Apartments, the Operating Partnership issued 633,734 Class A Units on October 1, 2020.

Holders of OP Units may not transfer their units without the Company’s prior consent as general partner of the Operating Partnership. Subject to the satisfaction of certain conditions, holders of Class A Units may tender their units for redemption by the Operating Partnership in exchange for cash equal to the market price of shares of the Company’s common stock at the time of redemption or, at the Company’s option and sole discretion, for unregistered or registered shares of common stock on a one-for-one1-for-one basis. Accordingly, the Company presents OP Units of the Operating Partnership not held by the Company as noncontrolling interests within equity in the consolidated balance sheets. 


Common Stock Dividends andClass AUnit Distributions
 
During the yearyears ended December 31, 2017,2020, 2019, and 2018, the Company declared the following dividends per common share and distributions per unit:
Declaration Date 
 
Record Date 
 
Paid Date 
 
Dividend Per
Share/Distribution
Per Unit 
February 2, 2017 March 29, 2017 April 6, 2017 $0.19
May 5, 2017 June 28, 2017 July 6, 2017 0.19
August 4, 2017 September 27, 2017 October 5, 2017 0.19
November 2, 2017 December 27, 2017 January 4, 2018 0.19
    Total $0.76
unit of $0.44, $0.84, and $0.80, respectively. During the yearyears ended December 31, 2017, the Company paid cash2020, 2019, and 2018, these common stock dividends of $31.1totaled $25.3 million, to common stockholders$45.4 million, and the$38.7 million, respectively, and these Operating Partnership paid cash distributions totaled $9.2 million, $16.9 million, and $13.8 million, respectively.

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Table of $12.6 million to holders of Class A Units.Contents

The tax treatment of dividends paid to common stockholders during the yearyears ended December 31, 20172020, 2019, and 2018 was as follows (unaudited):
Years ended December 31,
202020192018
Capital gains0 %10.62 %9.49 %
Ordinary income59.09 %68.83 %63.40 %
Return of capital40.91 %20.55 %27.11 %
Total100.00 %100.00 %100.00 %
Capital gains9.06%
Ordinary income71.59%
Return of capital19.35%
Total100.00%

During the yearyears ended December 31, 2016,2020 and 2019, the Company declared the following dividends of $1.687500 and $0.970315 per share, and distributions per unit:
Declaration Date Record Date Paid Date 
Dividend Per
Share/Distribution
Per Unit 
January 31, 2016 March 30, 2016 April 7, 2016 $0.18
May 2, 2016 June 29, 2016 July 7, 2016 0.18
August 4, 2016 September 28, 2016 October 6, 2016 0.18
November 3, 2016 December 28, 2016 January 5, 2017 0.18
    Total $0.72
respectively, to holders of Series A Preferred Stock. During the yearyears ended December 31, 2016, the2020 and 2019, these preferred stock dividends totaled $7.3 million and $2.5 million, respectively. The Company paid cashdid not have dividends of $22.7 million to common stockholders and the Operating Partnership paid cash distributions of $11.1 million to holders of Class A Units.
The tax treatment of dividends paid to common stockholdersfor preferred shares during the year ended December 31, 2016 was as follows (unaudited):
Capital gains—%
Ordinary income78%
Return of capital22%
Total100%

During the year ended December 31, 2015, the Company declared the following dividends per share and distributions per unit:
Declaration Date Record Date Paid Date 
Dividend Per
Share/Distribution
Per Unit 
January 28, 2015 April 1, 2015 April 9, 2015 $0.17
May 8, 2015 July 1, 2015 July 9, 2015 0.17
August 6, 2015 October 1, 2015 October 8, 2015 0.17
November 6, 2015 December 31, 2015 January 7, 2016 0.17
    Total $0.68

During the year ended December 31, 2015, the Company paid cash dividends of $17.1 million to common stockholders and the Operating Partnership paid cash distributions of $9.9 million to holders of OP Units.

The tax treatment of dividends paid to common stockholders during the year ended December 31, 2015 was as follows (unaudited):
Capital gains—%
Ordinary income64.2%
Return of capital35.8%
Total100.0%
Subsequent to December 31, 2017
On January 2, 2018, due to the holders of Class A Units tendering an aggregate of 163,000 Class A Units for redemption by the Operating Partnership, the Company elected to satisfy the redemption requests through the issuance of an equal number of shares of common stock.

On January 4, 2018, the Company paid cash dividends of $8.5 million to common stockholders and the Operating Partnership paid cash distributions of $3.3 million to holders of Class A Units. These dividends and distributions were declared and accrued as of December 31, 2017.

On January 29, 2018, the Company issued 117,228 Class A Units valued at $1.7 million in conjunction with the acquisition of Parkway Centre, a newly developed Publix-anchored shopping center in Moultrie, Georgia.

On February 22, 2018, the Company announced that its Board of Directors declared a cash dividend of $0.20 per common share for the first quarter of 2018. This represents a 5.3% increase over the prior quarter's cash dividend. The first quarter dividend will be payable in cash on April 5, 2018 to stockholders of record on March 28, 2018.


11.Stock-Based Compensation
11.    Stock-Based Compensation
 
The Company’s Amended and Restated 2013 Equity Incentive Plan (the "Equity Plan") permits the grant of restricted stock awards, stock options, stock appreciation rights, performance units, and other equity-based awards up to an aggregate of 1,700,000 shares of common stock. As of December 31, 2017,2020, the Company had 1,083,838728,783 shares of common stock reservedavailable for issuance under the Equity Plan.
 
During the years ended December 31, 2017, 2016,2020, 2019, and 2015,2018, the Company granted an aggregate of 0.1 million, 0.1 million176,382, 154,030 and 0.1 million164,241 shares of restricted stock to employees and nonemployee directors, respectively. The weighted average grant date fair value of the restricted stock awards granted during the years ended December 31, 2017, 2016,2020, 2019, and 20152018 was $1.7$2.8 million, $1.4$2.4 million and $1.2$2.2 million, respectively. Employee restricted stock awards generally vest over a period of two years: one-third immediately on the grant date and the remaining two-thirds in equal amounts on the first two anniversaries following the grant date, subject to continued service to the Company. Nonemployee director restricted stock awards vest either immediately upon grant or over a period of one year, subject to continued service to the Company. Unvested restricted stock awards are entitled to receive dividends from their grant date.

During the year ended December 31, 2020, the Company issued performance-based awards in the form of restricted stock units to certain employees. The performance period for these awards is three years, with a required two-year service period immediately following the expiration of the performance period in order to fully vest. The compensation expense and the effect on the Company’s weighted average diluted shares calculation were immaterial. During the three months ended March 31, 2020, 10,600 shares were issued with a grant date fair value of $18.08 per share due to the partial vesting of performance units awarded to certain employees in 2017. Of those shares, 3,677 were surrendered by the employees for income tax withholdings. During the three months ended December 31, 2020, 10,842 shares were issued with a grant date fair value of $11.11 per share due to the partial vesting of performance units awarded to certain employees in 2016 and 2017. Of those shares, 3,165 were surrendered by the employees for income tax withholdings.
 
During the years ended December 31, 2017, 2016,2020, 2019, and 2015,2018, the Company recognized $1.5$2.9 million, $1.2$2.4 million and $1.0$2.0 million of stock-based compensation, respectively. As of December 31, 2017,2020, the total unrecognized compensation cost related to nonvested restricted shares was $0.5$0.8 million, substantially all of which the Company expects to recognize over the next 2015 months.


Compensation cost relating to stock-based compensation for the years ended December 31, 2020, 2019, and 2018 was recorded as follows (in thousands):
 Years Ended December 31, 
 202020192018
General and administrative expense$1,615 $1,211 $1,073 
General contracting and real estate services expenses763 402 213 
Capitalized in conjunction with development projects483 746 661 
Total stock-based compensation cost$2,861 $2,359 $1,947 
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The following table summarizes the changes in the Company’s nonvested restricted stock awards during the year ended December 31, 2017:2020:
Restricted Stock
Awards		Weighted Average Grant Date Fair Value Per Share
Restricted Stock
Awards
 Weighted Average Grant Date Fair Value Per Share
Nonvested as of January 1, 2017104,839
 $11.20
Nonvested as of January 1, 2020Nonvested as of January 1, 2020143,952 $14.88 
Granted118,361
 14.04
Granted176,382 15.77 
Vested(109,950) 12.26
Vested(151,041)15.42 
Forfeited(461) 12.99
Forfeited(1,715)16.35 
Nonvested as of December 31, 2017112,789
 $13.14
Nonvested as of December 31, 2020Nonvested as of December 31, 2020167,578 $15.31 
 
Restricted stock awards granted and vested during the year ended December 31, 20172020 include 21,18827,060 shares tendered by employees to satisfy minimum statutory tax withholding obligations.


12.Fair Value of Financial Instruments
12.    Fair Value of Financial Instruments
 
Fair value measurements are based on assumptions that market participants would use in pricing an asset or a liability. The hierarchy for inputs used in measuring fair value is as follows:
 
Level 1 Inputs—Inputs — quoted prices in active markets for identical assets or liabilities
Level 2 Inputs—Inputs — observable inputs other than quoted prices in active markets for identical assets and liabilities
 
Level 3 Inputs—Inputs — unobservable inputs
 
Except as disclosed below, the carrying amounts of the Company’s financial instruments approximate their fair value.values. Financial assets and liabilities whose fair values are measured on a recurring basis using Level 2 inputs consist of interest rate swaps and interest rate caps. The Company measures the fair values of these assets and liabilities based on prices provided by independent market participants that are based on observable inputs using market-based valuation techniques.
 
Financial assets and liabilities whose fair values are not measured at fair value but for which the fair value is disclosed include the Company's notes receivable and indebtedness. The fair value is estimated by discounting the future cash flows of each instrument at estimated market rates consistent with the maturity, credit characteristics, and other terms of the arrangements, which are Level 3 inputs under the fair value hierarchy.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. For disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
The fair value of the Company’s debt is sensitive to fluctuations in interest rates. Discounted cash flow analysis based on Level 2 inputs is generally used to estimate the fair value of the Company’s debt.

Considerable judgment is used to estimate the fair value of financial instruments. The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments.


The carrying amounts and fair values of the Company’s financial instruments all of which are based on Level 2 inputs, as of December 31, 20172020 and 20162019 were as follows (in thousands):
 December 31, 
 20202019
 Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Indebtedness, net$963,845 $980,714 $950,537 $958,421 
Notes receivable135,432 135,223 159,371 159,371 
Interest rate swap liabilities14,853 14,853 7,720 7,720 
Interest rate swap and cap assets90 90 25 25 
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 December 31, 
 2017 2016
 
Carrying
Value
 
Fair
Value
 
Carrying
Value
 
Fair
Value
Indebtedness, net$517,272
 $518,417
 $522,180
 $527,414
Interest rate swap liabilities69
 69
 829
 829
Interest rate swap and cap assets1,525
 1,525
 259
 259
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13.Income Taxes
13.    Income Taxes
 
The income tax benefit (provision) for the years ended December 31, 2017, 2016,2020, 2019, and 20152018 comprised the following (in thousands):
 Years Ended December 31, 
 202020192018
Federal income taxes:         
Current$290 $430 $(14)
Deferred(18)(20)37 
State income taxes:   
Current14 85 (1)
Deferred(3)(4)7 
Income tax benefit$283 $491 $29 
 Years Ended December 31, 
 2017 2016 2015
Federal income taxes:           
Current$(516) $(197) $102
Deferred(131) (109) (72)
State income taxes:     
Current(62) (24) 13
Deferred(16) (13) (9)
Income tax benefit (provision)$(725) $(343) $34
The legislation commonly known as the Tax Cuts and Jobs Act (the "Tax Act") was enacted on December 22, 2017. The Tax Act reduced the U.S. federal corporate tax rate from 35% to 21% (including with respect to taxable REIT subsidiaries), resulting in the Company's remeasuring its existing deferred tax balances. In addition, generally beginning in 2018, the Tax Act alters the deductibility of certain items (e.g., interest expense) and allows the cost of certain qualifying capital asset investments to be deducted fully in the year they were purchased, subject to a phase-down of the deduction percentage over time. As of December 31, 2017, the Company has not fully completed its analysis of the tax effects of the Tax Act; however, it has made a reasonable estimate of the effects on the deferred tax balances. The Company remeasured deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The provisional amounts recorded related to the remeasurement of the deferred tax balance was approximately $0.2 million of tax expense.

The Company has not fully completed its analysis of the tax effects of the Tax Act; however, it has made a reasonable estimate of the effects on the deferred tax balances. Our estimates are subject to change as additional clarification and implementation guidance is made available by the Internal Revenue Service or other standard-setting bodies, and as a result, we may make adjustments to provisional amounts. It is not expected that such adjustments, however, will materially affect our financial position and results of operations or our effective tax rate in the period in which the adjustments are made.


As of December 31, 20172020 and 2016,2019, the Company had $0.3$0.5 million and $0.5$0.9 million, respectively, of net deferred tax assets representing net operating losses of the TRS that are being carried forward and basis differences in the assets of the TRS and stock-based compensation attributable toTRS. The deferred tax assets are presented within other assets in the TRS.consolidated balance sheets.


Management has evaluated the Company’s income tax positions and concluded that the Company has no0 uncertain income tax positions as of December 31, 20172020 and 2016.2019. The Company is generally subject to examination by the applicable taxing authorities for the tax years 20142017 through 2017.2020. The Company does not currently have any ongoing tax examinations by taxing authorities.



14.Other Assets
14.    Other Assets
 
Other assets were comprised of the following as of December 31, 20172020 and 20162019 (in thousands):
 
December 31, 
December 31,  20202019
2017 2016
Acquired lease intangibles, net$29,881
 $38,853
Leasing costs, net9,651
 9,338
Leasing costs, net$13,007 $11,357 
Leasing incentives, net4,217
 4,764
Leasing incentives, net3,303 2,855 
Interest rate swaps and caps1,515
 259
Interest rate swaps and caps90 25 
Prepaid expenses and other8,937
 9,797
Prepaid expenses and other11,542 12,192 
Advance deposits on property acquisitions400
 75
Preacquisition development costs1,352
 1,079
Preacquisition and predevelopment costsPreacquisition and predevelopment costs15,382 6,472 
Other assets$55,953
 $64,165
Other assets$43,324 $32,901 
 
15.Other Liabilities
15.    Other Liabilities
 
Other liabilities were comprised of the following as of December 31, 20172020 and 20162019 (in thousands):
 
December 31,  December 31, 
2017 2016 20202019
Dividends and distributions payable$11,887
 $9,727
Dividends and distributions payable$11,753 $17,477 
Deferred ground rent payable8,732
 8,202
Acquired lease intangibles, net13,829
 15,545
Acquired lease intangibles, net15,621 21,300 
Prepaid rent and other3,171
 3,227
Prepaid rent and other9,068 8,604 
Security deposits1,674
 1,679
Security deposits2,976 2,673 
Interest rate swaps59
 829
Interest rate swaps14,853 7,720 
Guarantee liabilityGuarantee liability2,631 5,271 
Other liabilities$39,352
 $39,209
Other liabilities$56,902 $63,045 
 
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16.Acquired Lease Intangibles
16.    Acquired Lease Intangibles
 
The following table summarizes the Company’s acquired lease intangibles as of December 31, 20172020 (in thousands):
 
December 31, 2017 December 31, 2020
Gross Carrying Accumulated Net Carrying Gross CarryingAccumulatedNet Carrying
Amount Amortization  Amount AmountAmortization Amount
In-place lease assets$50,506
 $25,193
 $25,313
In-place lease assets$110,643 $54,276 $56,367 
Above-market lease assets4,817
 1,923
 2,894
Above-market lease assets5,638 3,851 1,787 
Below-market ground lease assetsBelow-market ground lease assets
Below-market operating ground lease assetsBelow-market operating ground lease assets1,920 406 1,514 
Below-market finance ground lease assetsBelow-market finance ground lease assets6,629 261 6,368 
Below-market lease liabilities18,089
 4,260
 13,829
Below-market lease liabilities25,015 9,394 15,621 
Below-market ground lease assets1,920
 246
 1,674
 

The following table summarizes the Company’s acquired lease intangibles as of December 31, 20162019 (in thousands):
 
 December 31, 2019
 Gross CarryingAccumulatedNet Carrying
 AmountAmortizationAmount
In-place lease assets$112,555 $47,341 $65,214 
Above-market lease assets7,039 3,551 3,488 
Below-market ground lease assets
Below-market operating ground lease assets1,920 352 1,568 
Below-market finance ground lease assets6,629 102 6,527 
Below-market lease liabilities29,575 8,275 21,300 
 December 31, 2016
 Gross Carrying Accumulated Net Carrying
 Amount Amortization Amount
In-place lease assets$49,124
 $15,350
 $33,774
Above-market lease assets4,490
 1,138
 3,352
Below-market lease liabilities18,039
 2,494
 15,545
Below-market ground lease assets1,920
 193
 1,727

Amortization of in-place lease assets forDuring the years ended December 31, 2017, 2016,2020, 2019, and 2015 was $9.7 million, $10.2 million,2018, the Company recognized the following amortization of intangible lease assets and $2.9 million, respectively.liabilities (in thousands):

 Years Ended December 31, 
 202020192018
Intangible lease assets
In-place lease assets$6,935 $14,971 $7,676 
Above-market lease assets300 875 753 
Below-market ground lease assets
Amortization of below-market operating ground lease assets (a)
54 53 53 
Amortization of below-market finance ground lease assets (a)(b)
159 102 0 
Intangible lease liabilities
Below-market lease liabilities1,119 2,261 1,754 

(a) Prior to 2019, Amortization of above-market lease assets forBelow Market Ground Leases was included in Rental Expenses. With the years ended December 31, 2017, 2016, and 2015 was $0.8 million, $0.9 million, and $0.3 million, respectively.

adoption of ASC 842 on 1/1/2019, Amortization of below-market lease liabilities forbelow market ground rents became a component of the years ended December 31, 2017, 2016,amortization of the right-of-use assets of Operating and 2015 was $1.8 million, $1.8 million, and $0.1 million,Finance Leases, respectively.

(b) All of the Company's leases were classified as Operating Leases prior to 2019.
Amortization of below-market ground lease assets for the years ended December 31, 2017, 2016, and 2015 was $0.1 million, $0.1 million, and $0.1 million, respectively.


As of December 31, 2017,2020, the weighted-average remaining lives of in-place lease assets, above-market lease assets, below-market lease liabilities, below-market ground lease assets - operating and below-market ground lease assets - finance were 4.97.3 years, 6.03.0 years, 4.912.9 years, 28.5 years, and 31.540.2 years, respectively. As of December 31, 2017,2020, the weighted-average remaining life of below-market lease renewal options was 13.89.1 years.
 
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Estimated amortization of acquired lease intangibles for each of the five succeeding years is as follows (in thousands):
 
    Depreciation and  Depreciation and
Rental Revenues Rental Expenses Amortization Rental RevenuesAmortization
Year ending December 31,      Year ending December 31,   
2018$928
 $53
 $7,170
2019842
 53
 5,359
2020706
 53
 3,659
2021721
 53
 2,250
2021$1,433 $13,184 
2022689
 53
 1,669
20221,443 8,232 
202320231,341 6,780 
202420241,383 5,560 
202520251,347 4,962 
 
17.Related Party Transactions
17.    Related Party Transactions
 
The Companyprovides general contracting and real estate services to certain related party entities that are not included in these consolidated financial statements. Revenue from construction contracts with related party entities of the Company was $7.6$52.2 million, $26.7$5.7 million and $9.6$1.5 million for the years ended December 31, 2017, 2016,2020, 2019, and 2015,2018, respectively. Gross profits from such contracts were $0.4$2.0 million, $1.0$0.2 million and $0.3 million for the years ended December 31, 2017, 2016,2020, 2019, and 2015,2018, respectively. AmountsAs of December 31, 2020 and 2019, there was $8.6 million and $1.9 million, respectively, outstanding from related parties of the Company included in net construction receivables as of December 31, 2017 and 2016 were $0.2 million and $3.4 million, respectively.receivables. Real estate services fees from affiliated entities of the Company were not material for any of the years ended December 31, 2017, 2016,2020, 2019, and 2015.2018. In addition, affiliated entities also reimburse the Company for monthly maintenance and facilities management services provided to the properties. Cost reimbursements earned by the Company from affiliated entities were not material for any of the years ended December 31, 2017, 2016,2020, 2019, and 2015.2018.

In connectionThe general contracting services described above include contracts with an aggregate price of $81.0 million with the formation transactions for the Company's IPO, the Operating Partnership entered into tax protection agreements that indemnify certain directorsdeveloper of a mixed-use project, including an apartment building, retail space, and executive officersa parking garage to be located in Virginia Beach, Virginia. The developer is owned in part by executives of the Company, from their tax liabilities

resulting fromnot including the potential future saleChief Executive Officer and Chief Financial Officer. These contracts were executed in October and December 2019 and are projected to result in aggregate gross profit of certain$3.1 million to the Company, representing a gross profit margin of 3.8%. As part of these contracts and per the requirements of the Company’s properties within seven (or, inlender for this project, the Company issued a limited numberletter of cases, ten) yearscredit for $9.5 million to secure certain performances of the completionCompany's subsidiary construction company under the contracts, which remains outstanding as of December 31, 2020.

On October 1, 2020, the Company acquired Edison Apartments, a multifamily property located in downtown Richmond, Virginia, for consideration comprised of 633,734 Class A Units, the assumption of a $16.4 million loan payable, and the assumption of $1.1 million in other assets and liabilities. The seller of the formation transactions on May 13, 2013. Upon completing the saleproject is comprised in part by members of the Virginia Natural Gas office property on November 20, 2014,Company's management and board of directors. Additionally, a development fee of $1.8 million, which was included in the Operating Partnershipassumed assets and liabilities, was paid $1.3 million under such tax protection agreements.to the development group partially owned by members of the Company's management and board of directors.
  
18.Commitments and Contingencies
18.    Commitments and Contingencies
 
Legal Proceedings
 
The Company is from time to time involved in various disputes, lawsuits, warranty claims, environmental and other matters arising in the ordinary course of its business. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters.
 
The Company currently is a party to various legal proceedings, none of which management expects will have a material adverse effect on the Company’s financial position, results of operations, or liquidity. Management accrues a liability for litigation if an unfavorable outcome is determined to be probable and the amount of loss can be reasonably estimated. If an unfavorable outcome is determined by management to be probable and a range of loss can be reasonably estimated, management accrues the best estimate within the range; however, if no amount within the range is a better estimate than any other, the minimum amount within the range is accrued. Legal fees related to litigation are expensed as incurred. Management does not believe that the ultimate outcome of these matters, either individually or
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in the aggregate, could have a material adverse effect on the Company’s financial position or results of operations; however, litigation is subject to inherent uncertainties.


Under the Company’s leases, tenants are typically obligated to indemnify the Company from and against all liabilities, costs, and expenses imposed upon or asserted against it as owner of the properties due to certain matters relating to the operation of the properties by the tenant.
 
Guarantees

In connection with the Company's mezzanine lending activities, the Company has made guarantees to pay portions of certain senior loans of third parties associated with the development projects. The following table summarizes the payment guarantees made by the Company as of December 31, 2020 (in thousands):
Payment guarantee amount
Delray Plaza$5,180 
Interlock Commercial34,300 
Total$39,480 

Commitments
 
The Company has a bonding line of credit for its general contracting construction business and is contingently liable under performance and payment bonds, bonds for cancellation of mechanics liens, and defect bonds. Such bonds collectively totaled $44.9$2.4 million and $40.5$4.3 million as of December 31, 20172020 and 2016,2019, respectively. In addition, during the year ended December 31, 2019, the Company issued a letter of credit for $9.5 million to secure certain performances of the Company's subsidiary construction company under a related party project, which was still in effect at December 31, 2020.
 
The Operating Partnership has entered into standby letters of credit using the available capacity under the credit facility. The letters of credit relaterelated to the guarantee of future performance on certain of the Company’s construction contracts. Letters of credit generally are available for draw down in the event the Company does not perform. As of December 31, 20172020 and 2016,2019, the Operating Partnership had totalan outstanding lettersletter of credit of $2.1$9.5 million, and $4.1 million, respectively. The amounts outstanding at December 31, 2017 and 2016 include a $2.1 million letter of credit related to the guarantee on the Point Street Apartments senior construction loan.as noted above.
 
The Company has five ground leases on four properties with initial terms that range from 20 to 65 years and options to extend up to an additional 40 years in certain cases. The Company also leases automobiles and equipment.
Future minimum rental payments during each of the next five years and thereafter are as follows (in thousands):
2018$2,260
20192,145
20202,104
20212,057
20221,897
Thereafter89,556
Total$100,019
Ground rent expense for the years ended December 31, 2017, 2016, and 2015 was $2.5 million, $2.0 million and $1.7 million, respectively.

Concentrations of Credit Risk
 
The majority of the Company’s properties are located in Hampton Roads, Virginia. For the years ended December 31, 2017, 2016,2020, 2019, and 2015,2018, rental revenues from Hampton Roads properties represented 53%44%, 58%48% and 68%53%, respectively, of the Company’s rental revenues. Many of the Company’s Hampton Roads properties are located in the Town Center of Virginia Beach. For the years ended December 31, 2017, 2016,2020, 2019, and 2015,2018, rental revenues from Town Center properties represented 38%27%, 41%31% and 46%38%, respectively, of the Company’s rental revenues. Rental revenues from Richmond Tower, which the Company sold in January 2016, individually represented 1% and 11% of the Company’s rental revenues for the years ended December 31, 2016 and 2015, respectively.
 
A group of fivethree construction customers comprised 88%65%, 52%67%, and 15%55% of the Company’s general contracting and real estate services revenues for the years ended December 31, 2017, 2016,2020, 2019, and 2015,2018, respectively. The same customers represented 83%72%, 43%66%, and 20%28% of the Company’s general contracting and real estate services segment gross profit for the years ended December 31, 2017, 2016,2020, 2019, and 2015,2018, respectively.


19.Selected Quarterly Financial Data (Unaudited)
19.     Subsequent Events

The following tables summarize certain selected quarterlyCompany has evaluated subsequent events through the date on which this Form 10-K was filed, the date on which these financial datastatements were issued, and identified the items below for 2017discussion.

Real Estate

On January 4, 2021, the Company completed the sale of the 7-Eleven outparcel at Hanbury Village. Net proceeds after the transaction costs were $2.8 million. The gain on disposition is estimated at $2.4 million.

On January 14, 2021, the Company completed the sale of a land outparcel at Nexton Square for a sale price of $0.9 million. There was no gain or loss on the disposition.
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Indebtedness

On January 15, 2021, the Company refinanced the loan secured by 4525 Main Street and 2016 (in thousands, except per share data):Encore Apartments. The Company increased the total balance of the loan to $57.0 million. The new loan bears interest at a rate of 2.93% and will mature on February 10, 2026.

On January 28, 2021, the Company refinanced the Nexton Square loan and paid the balance down by $2.0 million, bringing the balance to $20.1 million. The loan bears interest at a rate of LIBOR plus a spread of 2.25% (LIBOR has a 0.25% floor) and will mature on February 1, 2023.

Borrowings under the revolving credit facility were $25.0 million on February 19, 2021.

Derivative Financial Instruments

On February 2, 2021, the Company entered into a LIBOR interest rate cap agreement on a notional amount of $100.0 million at a strike rate of 0.50% for a premium of less than $0.1 million. The interest rate cap will expire on February 1, 2023.

Equity
 
On January 7, 2021, the Company paid cash dividends of $6.5 million to common stockholders and the Operating Partnership paid cash distributions of $2.3 million to holders of Class A Units. These dividends and distributions were declared and accrued as of December 31, 2020.

On January 12, 2021, due to a holder of Class A Units tendering 12,000 Class A Units for redemption by the Operating Partnership, the Company elected to satisfy the redemption request through issuance of an equal numbers of shares of common stock.

On January 15, 2021, the Company paid cash dividends of $2.9 million to the holders of the Series A Preferred Stock. These dividends were declared and accrued as of December 31, 2020.

On February 9, 2021, the Company announced that its board of directors declared a cash dividend of $0.15 per common share for the first quarter of 2021. This represents a 36.0% increase over the prior quarter's cash dividend. The first quarter dividend will be payable in cash on April 8, 2021 to stockholders of record on March 31, 2021.

On February 9, 2021, the Company announced that its board of directors declared a cash dividend of $0.421875 per share of Series A Preferred Stock for the first quarter of 2021. The dividend will be payable in cash on April 15, 2021 to stockholders of record on April 1, 2021.

Commitments

On January 7, 2021, the Operating Partnership entered into a $15.0 million standby letter of credit to guarantee the funding of its investment in the Harbor Point Parcel 3 partnership.


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 2017 Quarters
 First Second Third Fourth
Rental revenues$27,232
 $26,755
 $27,096
 $27,654
General contracting and real estate services revenues63,519
 56,671
 41,201
 32,643
Net operating income20,978
 20,645
 19,397
 19,211
Net income8,753
 4,943
 10,461
 5,768
Net income attributable to stockholders5,936
 3,471
 7,488
 4,152
Net income per share: basic and diluted$0.16
 $0.08
 $0.17
 $0.09
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 2016 Quarters
 First Second Third Fourth
Rental revenues$23,283
 $24,251
 $25,305
 $26,516
General contracting and real estate services revenues36,803
 33,200
 38,552
 50,475
Net operating income17,371
 17,973
 18,393
 19,740
Net income26,533
 3,131
 7,946
 5,145
Net income attributable to stockholders17,370
 2,034
 5,212
 3,458
Net income per share: basic and diluted$0.57
 $0.06
 $0.15
 $0.09




SCHEDULE III—Consolidated Real Estate Investments and Accumulated Depreciation
December 31, 20172020
  
   Initial CostCost CapitalizedGross Carrying Amount  Year of 
    Building andSubsequent to Building and AccumulatedNet CarryingConstruction/ 
 Encumbrances LandImprovementsAcquisitionLandImprovementsTotalDepreciation
Amount (1)
Acquisition 
Office
4525 Main Street$31,231  $982 $0 $52,562 $982 $52,562 $53,544 $9,994 $43,550 2014 
Armada Hoffler Tower0 (2)1,976 0 61,372 1,976 61,372 63,348 38,057 25,291 2002 
Brooks Crossing Office15,393 295 0 19,546 295 19,546 19,841 1,129 18,712 2016
One City Center24,712 2,911 28,202 6,173 2,911 34,375 37,286 1,655 35,631 2019
One Columbus0 (2)960 10,269 12,857 960 23,126 24,086 12,878 11,208 1984 
Thames Street Wharf70,000 15,861 64,689 233 15,861 64,922 80,783 2,539 78,244 2010/2019
Two Columbus0 (2)53 0 21,145 53 21,145 21,198 9,487 11,711 2009 
Wills Wharf59,044 0 0 104,209 0 104,209 104,209 1,205 103,004 2019(4)
Total office$200,380 $23,038 $103,160 $278,097 $23,038 $381,257 $404,295 $76,944 $327,351   
Retail           
249 Central Park Retail$16,597 $712 $0 $16,526 $712 $16,526 $17,238 $8,703 $8,535 2004 
Apex Entertainment0 (2)67 0 17,827 67 17,827 17,894 5,360 12,534 2002
Broad Creek Shopping Center0 (2)0 0 9,101 0 9,101 9,101 4,593 4,508 1997-2001 
Broadmoor Plaza0 (2)2,410 9,010 1,029 2,410 10,039 12,449 2,356 10,093 1980/2016
Brooks Crossing Retail0 359 0 2,333 359 2,333 2,692 303 2,389 2016
Columbus Village0 (2)7,631 10,135 8,019 7,631 18,154 25,785 3,326 22,459 1980/2015 
Columbus Village II0 (2)14,536 10,922 63 14,536 10,985 25,521 1,788 23,733 1995/2016
Commerce Street Retail0 (2)118 0 3,317 118 3,317 3,435 1,872 1,563 2008 
Courthouse 7-Eleven0 (2)1,007 0 1,044 1,007 1,044 2,051 244 1,807 2011 
Dimmock Square0 (2)5,100 13,126 392 5,100 13,518 18,618 2,438 16,180 1998/2014 
Fountain Plaza Retail9,988 425 0 7,406 425 7,406 7,831 3,799 4,032 2004 
Greentree Shopping Center0 (2)1,103 0 4,136 1,103 4,136 5,239 1,077 4,162 2014 
Hanbury Village0 (2)2,566 0 16,249 2,566 16,249 18,815 7,037 11,778 2006 
Harrisonburg Regal0 1,554 0 4,148 1,554 4,148 5,702 2,309 3,393 1999 
Lexington Square14,440 3,035 20,581 269 3,035 20,850 23,885 1,658 22,227 2017/2018
Market at Mill Creek13,789 2,261 0 20,878 2,261 20,878 23,139 1,156 21,983 2018
Marketplace at Hilltop10,120 2,023 19,886 50 2,023 19,936 21,959 955 21,004 2000/2019
Nexton Square22,909 9,086 27,760 807 9,086 28,567 37,653 337 37,316 2020/2020
North Hampton Market0 (2)7,250 10,210 687 7,250 10,897 18,147 2,175 15,972 2004/2016
North Point Center2,094 (3)1,936 0 25,733 1,936 25,733 27,669 15,053 12,616 1998 
Oakland Marketplace0 (2)1,850 3,370 692 1,850 4,062 5,912 1,124 4,788 2004/2016
Parkway Centre0 (2)1,372 7,864 114 1,372 7,978 9,350 717 8,633 2017/2018
Parkway Marketplace0 (2)1,150 0 3,841 1,150 3,841 4,991 2,133 2,858 1998
Patterson Place0 (2)15,059 20,180 726 15,059 20,906 35,965 3,235 32,730 2004/2016
Perry Hall Marketplace0 (2)3,240 8,316 459 3,240 8,775 12,015 1,901 10,114 2001/2015 
Premier Retail8,241 318 0 15,069 318 15,069 15,387 979 14,408 2018
F-50
Table of Contents
  
  
Initial Cost Cost Capitalized Gross Carrying Amount  
  
  Year of
  
  
  
  Building and Subsequent to   Building and   Accumulated
  
Net Carrying Construction/
  
 Encumbrances
  
Land Improvements Acquisition Land Improvements Total Depreciation
  
Amount(1) Acquisition
  
Office 
     
             
     
   
  
4525 Main Street$32,034
  
$982
 $—
 $45,338
 $982
 $45,338
 $46,320
 $4,422
  
$41,898
 2014
  
Armada Hoffler Tower—
(2) 
1,976
 —
 57,887
 1,976
 57,887
 59,863
 29,625
  
30,238
 2002
  
One Columbus—
(2) 
960
 10,269
 8,772
 960
 19,041
 20,001
 10,280
  
9,721
 1984
  
Two Columbus—
(2) 
53
 —
 19,364
 53
 19,364
 19,417
 6,941
  
12,476
 2009
  
Total office$32,034
  
$3,971
 $10,269
 $131,361
 $3,971
 $141,630
 $145,601
 $51,268
  
$94,333
  
  
Retail 
  
             
  
   
  
249 Central Park Retail$16,851
  
$712
 $—
 $15,108
 $712
 $15,108
 $15,820
 $8,228
  
$7,592
 2004
  
Alexander Pointe—
(2) 
4,050
 4,880
 58
 4,050
 4,938
 8,988
 466
 8,522
 1997/2016
 
Bermuda Crossroads—
(2) 
5,450
 10,641
 1,053
 5,450
 11,694
 17,144
 2,183
  
14,961
 2001/2013
  
Broad Creek Shopping Center—
(2) 
—
 —
 15,945
 —
 15,945
 15,945
 9,010
  
6,935
 1997-2001
  
Broadmoor Plaza—
(2) 
2,410
 9,010
 346
 2,410
 9,356
 11,766
 881
 10,885
 1980/2016
 
Brooks Crossing—
 117
 —
 2,213
 117
 2,213
 2,330
 88
 2,242
 2016
 
Columbus Village8,298
  
7,631
 10,135
 9
 7,631
 10,144
 17,775
 732
  
17,043
 1980/2015
  
Columbus Village II—
(2) 
14,536
 10,922
 23
 14,536
 10,945
 25,481
 520
 24,961
 1995/2016
 
Commerce Street Retail—
(2) 
118
 —
 3,220
 118
 3,220
 3,338
 1,342
  
1,996
 2008
  
Courthouse 7-Eleven—
(2) 
1,007
 —
 1,043
 1,007
 1,043
 2,050
 163
  
1,887
 2011
  
Dick’s at Town Center—
(2) 
67
 —
 10,572
 67
 10,572
 10,639
 3,920
  
6,719
 2002
  
Dimmock Square—
(2) 
5,100
 13,126
 188
 5,100
 13,314
 18,414
 1,254
  
17,160
 1998/2014
  
Fountain Plaza Retail10,145
  
425
 —
 7,135
 425
 7,135
 7,560
 3,154
  
4,406
 2004
  
Gainsborough Square—
(2) 
2,229
 —
 7,182
 2,229
 7,182
 9,411
 3,206
  
6,205
 1999
  
Greentree Shopping Center—
  
1,103
 —
 4,018
 1,103
 4,018
 5,121
 513
  
4,608
 2014
  
Hanbury Village19,503
(2) 
3,793
 —
 19,342
 3,793
 19,342
 23,135
 6,344
  
16,791
 2006
  
Harper Hill Commons—
(2) 
2,840
 8,510
 93
 2,840
 8,603
 11,443
 608
 10,835
 2004/2016
 
Harrisonburg Regal—
  
1,554
 —
 4,148
 1,554
 4,148
 5,702
 1,989
  
3,713
 1999
  
Lightfoot Marketplace10,500
  
7,628
 —
 14,714
 7,628
 14,714
 22,342
 794
 21,548
 2016
 
North Hampton Market—
(2) 
7,250
 10,210
 401
 7,250
 10,611
 17,861
 953
 16,908
 2004/2016
 
North Point Center12,030
(2) 
1,936
 —
 25,417
 1,936
 25,417
 27,353
 12,652
  
14,701
 1998
  
Oakland Marketplace—
(2) 
1,850
 3,370
 26
 1,850
 3,396
 5,246
 584
 4,662
 2004/2016
 
Parkway Marketplace—
(2) 
1,150
 —
 3,664
 1,150
 3,664
 4,814
 1,776
  
3,038
 1998
  
Patterson Place—
(2) 
15,059
 20,180
 231
 15,059
 20,411
 35,470
 1,353
 34,117
 2004/2016
 
Perry Hall Marketplace—
(2) 
3,240
 8,316
 383
 3,240
 8,699
 11,939
 872
  
11,067
 2001/2015
  
Providence Plaza—
(2) 
9,950
 12,369
 670
 9,950
 13,039
 22,989
 937
  
22,052
 2007/2015
  
Renaissance Place—
(2) 
6,730
 8,439
 89
 6,730
 8,528
 15,258
 335
 14,923
 2008/2016
 

Providence PlazaProvidence Plaza0 (2)9,950 12,369 1,580 9,950 13,949 23,899 2,460 

21,439 2007/2015 
Red Mill CommonsRed Mill Commons23,341 (3)44,252 30,348 778 44,252 31,126 75,378 2,623 72,755 2000/2019
Sandbridge Commons8,468
 4,825
 —
 7,285
 4,825
 7,285
 12,110
 839
  
11,271
 2015
  
Sandbridge Commons0 (2)4,825 0 7,365 4,825 7,365 12,190 1,833 

10,357 2015 
Socastee Commons4,771
 2,320
 5,380
 121
 2,320
 5,501
 7,821
 530
  
7,291
 2000/2015
  
Socastee Commons4,458 2,320 5,380 149 2,320 5,529 7,849 1,147 

6,702 2000/2015 
South Retail7,394
 190
 —
 7,635
 190
 7,635
 7,825
 3,964
  
3,861
 2002
  
South Retail7,287 190 0 8,165 190 8,165 8,355 4,809 

3,546 2002 
South Square—
(2) 
14,130
 12,670
 164
 14,130
 12,834
 26,964
 953
 26,011
 1977/2016
 South Square0 (2)14,130 12,670 930 14,130 13,600 27,730 2,390 25,340 1977/2016
Southgate Square20,708
 8,890
 25,950
 249
 8,890
 26,199
 35,089
 1,467
 33,622
 1991/2016
 Southgate Square19,682 10,238 25,950 4,700 10,238 30,650 40,888 4,336 36,552 1991/2016
Southshore Shops—
(2) 
1,770
 6,509
 16
 1,770
 6,525
 8,295
 289
 8,006
 2006/2016
 Southshore Shops0 (2)1,770 6,509 208 1,770 6,717 8,487 937 7,550 2006/2016
Stone House Square—
(2) 
6,360
 16,350
 277
 6,360
 16,627
 22,987
 1,548
  
21,439
 2008/2015
  
Studio 56 Retail—
(2) 
76
 —
 2,475
 76
 2,475
 2,551
 825
  
1,726
 2007
  
Studio 56 Retail0 (2)76 0 2,532 76 2,532 2,608 1,083 

1,525 2007 
Tyre Neck Harris Teeter—
(2) 
—
 —
 3,306
 —
 3,306
 3,306
 923
  
2,383
 2011
  
Tyre Neck Harris Teeter0 (2)0 0 3,306 0 3,306 3,306 1,422 

1,884 2011 
Waynesboro Commons—
(2) 
1,300
 1,610
 47
 1,300
 1,657
 2,957
 385
 2,572
 1993/2016
 
Wendover Village—
(2) 
18,260
 21,700
 52
 18,260
 21,752
 40,012
 1,100
 38,912
 2004/2016-2017
 Wendover Village0 (2)19,893 22,638 475 19,893 23,113 43,006 3,115 39,891 2004/2016-2019
Total retail$118,668
 $166,056
 $220,277
 $158,918
 $166,056
 $379,195
 $545,251
 $77,680
  
$467,571
  
  
Total retail$152,946 $193,812 $277,224 $191,103 $193,812 $468,327 $662,139 $102,783 

$559,356  
Mutifamily                                                    
 
MultifamilyMultifamily
1405 Point1405 Point$53,000 $0 $95,466 $2,775 $0 $98,241 $98,241 $5,261 $92,980 2018/2019
Edison ApartmentsEdison Apartments16,272 3,428 18,582 383 3,428 18,965 22,393 128 22,265 1919 & 2014/2020
Encore Apartments$24,966
 $1,293
 $—
 $30,183
 $1,293
 $30,183
 $31,476
 $3,033
 $28,443
 2014
 Encore Apartments24,337 1,293 0 30,548 1,293 30,548 31,841 6,083 25,758 2014
Harding Place3,874
 5,706
 —
 22,997
 5,706
 22,997
 28,703
 —
 28,703
 —
(3) 
Greenside ApartmentsGreenside Apartments33,310 5,711 0 45,216 5,711 45,216 50,927 3,327 47,600 2018
Hoffler PlaceHoffler Place18,400 7,401 0 40,197 7,401 40,197 47,598 1,668 45,930 2019
Johns Hopkins Village46,698
 —
 —
 69,229
 —
 69,229
 69,229
 3,107

66,122
 2016
 Johns Hopkins Village50,859 0 0 70,117 0 70,117 70,117 10,071 60,046 2016
King Street—
 7,276
 —
 5,452
 7,276
 5,452
 12,728
 —
 12,728
 —
(3) 
Liberty Apartments14,694
 3,580
 23,494
 1,407
 3,580
 24,900
 28,480
 3,456
 25,024
 2013/2014
 Liberty Apartments13,877 3,580 23,494 2,084 3,580 25,578 29,158 5,951 23,207 2013/2014
Meeting Street—
 7,265
 —
 6,372
 7,265
 6,372
 13,637
 —
 13,637
 —
(3) 
Premier ApartmentsPremier Apartments16,716 647 0 29,169 647 29,169 29,816 2,060 27,756 2018
Smith’s Landing19,764
 —
 35,105
 1,765
 —
 36,870
 36,870
 5,613
 31,257
 2009/2013
 Smith’s Landing17,331 0 35,105 2,588 0 37,693 37,693 9,164 28,529 2009/2013
Solis GainesvilleSolis Gainesville0 5,200 0 6,208 5,200 6,208 11,408 0 11,408 2020(4)
Summit PlaceSummit Place23,100 7,315 0 48,567 7,315 48,567 55,882 576 55,306 2020
The Cosmopolitan45,209
 985
 —
 57,504
 985
 57,504
 58,489
 20,364
 38,125
 2006
 The Cosmopolitan42,909 985 0 72,208 985 72,208 73,193 29,199 43,994 2006
Town Center Phase VI1,505
 965
 —
 22,328
 965
 22,328
 23,293
 —
 23,293
 —
(3) 
The Residences at Annapolis JunctionThe Residences at Annapolis Junction84,375 14,774 104,801 34 14,774 104,835 119,609 750 118,859 2018/2020
Total multifamily$156,710
 $27,070
 $58,599
 $217,237
 $27,070
 $275,835
 $302,905
 $35,573
 $267,332
  
 Total multifamily$394,486 $50,334 $277,448 $350,094 $50,334 $627,542 $677,876 $74,238 $603,638   
Held for development$—
 $680
 $—
 $—
 $680
 $—
 $680
 $—
 $680
  
 Held for development$0 $13,607 $0 $0 $13,607 $0 $13,607 $0 $13,607   
Real estate investments$307,412
 $197,777
 $289,145
 $507,516
 $197,777
 $796,660
 $994,437
 $164,521
 $829,916
  
 Real estate investments$747,812 $280,791 $657,832 $819,294 $280,791 $1,477,126 $1,757,917 $253,965 $1,503,952   


(1)The net carrying amount of real estate for federal income tax purposes was $698.1 million as of December 31, 2017.  
(2)Borrowing base collateral for the credit facility as of December 31, 2017.  
(3)Construction in progress as of December 31, 2017.  
(1)The net carrying amount of real estate for federal income tax purposes was $1,288.5 million as of December 31, 2020.  
(2)Borrowing base collateral for the credit facility as of December 31, 2020.  

(3)A portion of this property is borrowing base collateral for the credit facility as of December 31, 2020.
(4)Construction in progress as of December 31, 2020.  
F-51
Table of Contents
Income producing property is depreciated on a straight-line basis over the following estimated useful lives:
 
Buildings39 years
Capital improvements15—5—20 years
Equipment5—153—7 years
Tenant improvementsTerm of the related lease
(or estimated useful life, if shorter)
 
 Real EstateAccumulated
 InvestmentsDepreciation
 December 31, 
 2020201920202019
Balance at beginning of the year$1,606,324 $1,176,586 $224,738 $188,775 
Construction costs and improvements58,039 143,700 — — 
Acquisitions196,214 314,898 — — 
Dispositions(101,768)(28,117)(14,444)(1,818)
Reclassifications(892)(743)0 (58)
Depreciation— — 43,671 37,839 
Balance at end of the year$1,757,917 $1,606,324 $253,965 $224,738 
 Real Estate Accumulated
 Investments Depreciation
 December 31, 
 2017 2016 2017 2016
Balance at beginning of the year$908,287
 $633,591
 $139,553
 $125,380
Construction costs and improvements84,142
 56,630
 —
 —
Acquisitions12,760
 248,987
 —
 —
Dispositions(10,146) (30,467) (1,006) (352)
Reclassifications(606) (454) —
 (8,928)
Depreciation—
 —
 25,974
 23,453
Balance at end of the year$994,437
 $908,287
 $164,521
 $139,553



F-43
F-52