UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023

☐ 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)

Maryland

46-1214914

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

222 Central Park Avenue

Suite 2100

Virginia Beach

Virginia

23462

(Address of principal executive offices)

(Zip Code)

(757) 366-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

AHH

New York Stock Exchange

6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share

AHHPrA

New York Stock Exchange

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 ☐ No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes ☐ No

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 accelerated filer," "accelerated filer," "smaller reporting ~~company"~~company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

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. ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

As of August 4, ~~2022,~~2023, the registrant had ~~67,729,650~~67,946,794 shares of common stock, $0.01 par value per share, outstanding. In addition, as of August 4, ~~2022,~~2023, Armada Hoffler, L.P., the registrant's operating partnership subsidiary, had ~~20,611,190~~21,603,062 units of limited partnership interest ("OP Units") outstanding (other than OP Units held by the registrant).

Table of Contents

ARMADA HOFFLER PROPERTIES, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, ~~2022~~2023

Table of Contents


		Page

Part I. Financial Information		1

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Comprehensive Income	2

	Condensed Consolidated Statements of Equity	3

	Condensed Consolidated Statements of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2425

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4246

Item 4.	Controls and Procedures	4347

Part II. Other Information		4448

Item 1.	Legal Proceedings	4448

Item 1A.	Risk Factors	4448

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4448

Item 3.	Defaults Upon Senior Securities	4448

Item 4.	Mine Safety Disclosures	4448

Item 5.	Other Information	4448

Item 6.	Exhibits	4549



Signatures		4650

Table of Contents

PART I. Financial Information

Item 1. Financial Statements

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Balance Sheets

(In thousands, except par value and share data)


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Real estate investments:	Real estate investments:					Real estate investments:
Income producing property	Income producing property	$	1,791,302	$	1,658,609	Income producing property	$	2,083,488	$	1,884,214
Held for development	Held for development	6,294		6,294		Held for development	6,294		6,294
Construction in progress	Construction in progress	71,676		72,535		Construction in progress	76,866		53,067
		1,869,272		1,737,438			2,166,648		1,943,575
Accumulated depreciation	Accumulated depreciation	(303,032)		(285,814)		Accumulated depreciation	(359,229)		(329,963)
Net real estate investments	Net real estate investments	1,566,240		1,451,624		Net real estate investments	1,807,419		1,613,612
Real estate investments held for sale		115,680		80,751

Cash and cash equivalents	Cash and cash equivalents	69,731		35,247		Cash and cash equivalents	34,054		48,139
Restricted cash	Restricted cash	6,681		5,196		Restricted cash	2,043		3,726
Accounts receivable, net	Accounts receivable, net	32,250		29,576		Accounts receivable, net	41,431		39,186
Notes receivable, net	Notes receivable, net	139,383		126,429		Notes receivable, net	60,095		136,039
Construction receivables, including retentions, net	Construction receivables, including retentions, net	29,107		17,865		Construction receivables, including retentions, net	93,880		70,822
Construction contract costs and estimated earnings in excess of billings	Construction contract costs and estimated earnings in excess of billings	493		243		Construction contract costs and estimated earnings in excess of billings	406		342
Equity method investments	Equity method investments	53,260		12,685		Equity method investments	102,371		71,983
Operating lease right-of-use assets	Operating lease right-of-use assets	23,387		23,493		Operating lease right-of-use assets	23,218		23,350
Finance lease right-of-use assets	Finance lease right-of-use assets	46,433		46,989		Finance lease right-of-use assets	92,994		45,878
Acquired lease intangible assets	Acquired lease intangible assets	107,147		62,038		Acquired lease intangible assets	131,181		103,870
Other assets	Other assets	75,743		45,927		Other assets	81,962		85,363
Total Assets	Total Assets	$	2,265,535	$	1,938,063	Total Assets	$	2,471,054	$	2,242,310
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Indebtedness, net	Indebtedness, net	$	1,080,664	$	917,556	Indebtedness, net	$	1,264,643	$	1,068,261
Liabilities related to assets held for sale		84,049		41,364

Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	22,886		29,589		Accounts payable and accrued liabilities	24,263		26,839
Construction payables, including retentions	Construction payables, including retentions	47,429		31,166		Construction payables, including retentions	102,377		93,472
Billings in excess of construction contract costs and estimated earnings	Billings in excess of construction contract costs and estimated earnings	15,075		4,881		Billings in excess of construction contract costs and estimated earnings	18,311		17,515
Operating lease liabilities	Operating lease liabilities	31,645		31,648		Operating lease liabilities	31,611		31,677
Finance lease liabilities	Finance lease liabilities	46,325		46,160		Finance lease liabilities	93,214		46,477
Other liabilities	Other liabilities	51,126		55,876		Other liabilities	54,973		54,055
Total Liabilities	Total Liabilities	1,379,199		1,158,240		Total Liabilities	1,589,392		1,338,296

Stockholders’ equity:	Stockholders’ equity:					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 shares authorized; 6,843,418 shares issued and outstanding as of June 30, 2022 and December 31, 2021		171,085		171,085
Common stock, $0.01 par value, 500,000,000 shares authorized; 67,729,650 and 63,011,700 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		677		630
Preferred stock, $0.01 par value, 100,000,000 shares authorized: 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, 9,980,000 shares authorized; 6,843,418 shares issued and outstanding as of June 30, 2023 and December 31, 2022						Preferred stock, $0.01 par value, 100,000,000 shares authorized: 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, 9,980,000 shares authorized; 6,843,418 shares issued and outstanding as of June 30, 2023 and December 31, 2022	171,085		171,085
Common stock, $0.01 par value, 500,000,000 shares authorized; 67,944,529 and 67,729,854 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively						Common stock, $0.01 par value, 500,000,000 shares authorized; 67,944,529 and 67,729,854 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	679		677
Additional paid-in capital	Additional paid-in capital	588,012		525,030		Additional paid-in capital	589,030		587,884
Distributions in excess of earnings	Distributions in excess of earnings	(135,942)		(141,360)		Distributions in excess of earnings	(142,233)		(126,875)
Accumulated other comprehensive gain (loss)		10,091		(33)
Accumulated other comprehensive gain						Accumulated other comprehensive gain	13,498		14,679
Total stockholders’ equity	Total stockholders’ equity	633,923		555,352		Total stockholders’ equity	632,059		647,450
Noncontrolling interests in investment entities	Noncontrolling interests in investment entities	23,952		629		Noncontrolling interests in investment entities	10,651		24,055
Noncontrolling interests in Operating Partnership	Noncontrolling interests in Operating Partnership	228,461		223,842		Noncontrolling interests in Operating Partnership	238,952		232,509
Total Equity	Total Equity	886,336		779,823		Total Equity	881,662		904,014
Total Liabilities and Equity	Total Liabilities and Equity	$	2,265,535	$	1,938,063	Total Liabilities and Equity	$	2,471,054	$	2,242,310

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Comprehensive Income

(In thousands, except per share data)

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues	Revenues									Revenues
Rental revenues	Rental revenues	$	55,224	$	47,378	$	109,859	$	93,119	Rental revenues	$	59,951	$	55,224	$	116,169	$	109,859
General contracting and real estate services revenues	General contracting and real estate services revenues	45,273		18,408		69,923		53,971		General contracting and real estate services revenues	102,574		45,273		186,812		69,923
Interest income										Interest income	3,414		3,352		7,133		6,920
Total revenues	Total revenues	100,497		65,786		179,782		147,090		Total revenues	165,939		103,849		310,114		186,702

Expenses	Expenses									Expenses
Rental expenses	Rental expenses	12,685		11,292		25,354		22,124		Rental expenses	13,676		12,685		26,636		25,354
Real estate taxes	Real estate taxes	5,837		5,465		11,241		10,771		Real estate taxes	5,631		5,837		11,043		11,241
General contracting and real estate services expenses	General contracting and real estate services expenses	43,418		18,131		67,239		52,406		General contracting and real estate services expenses	99,071		43,418		180,241		67,239
Depreciation and amortization	Depreciation and amortization	18,781		17,285		37,338		35,351		Depreciation and amortization	19,878		18,781		38,346		37,338
Amortization of right-of-use assets - finance leases	Amortization of right-of-use assets - finance leases	277		278		555		467		Amortization of right-of-use assets - finance leases	347		277		624		555
General and administrative expenses	General and administrative expenses	3,617		3,487		8,325		7,508		General and administrative expenses	4,052		3,617		9,500		8,325
Acquisition, development and other pursuit costs	Acquisition, development and other pursuit costs	26		32		37		103		Acquisition, development and other pursuit costs	18		26		18		37
Impairment charges	Impairment charges	286		83		333		3,122		Impairment charges	—		286		102		333
Total expenses	Total expenses	84,927		56,053		150,422		131,852		Total expenses	142,673		84,927		266,510		150,422
Gain on real estate dispositions, net	Gain on real estate dispositions, net	19,493		—		19,493		3,717		Gain on real estate dispositions, net	511		19,493		511		19,493
Operating income	Operating income	35,063		9,733		48,853		18,955		Operating income	23,777		38,415		44,115		55,773
Interest income		3,352		6,746		6,920		10,862
Interest expense	Interest expense	(9,371)		(8,418)		(18,402)		(16,393)		Interest expense	(13,629)		(9,371)		(25,931)		(18,402)

Loss on extinguishment of debt	Loss on extinguishment of debt	(618)		—		(776)		—		Loss on extinguishment of debt	—		(618)		—		(776)
Change in fair value of derivatives and other	Change in fair value of derivatives and other	2,548		314		6,730		707		Change in fair value of derivatives and other	5,005		2,548		2,558		6,730
Unrealized credit loss provision	Unrealized credit loss provision	(295)		(388)		(900)		(333)		Unrealized credit loss provision	(100)		(295)		(177)		(900)
Other income (expense), net	Other income (expense), net	68		7		297		186		Other income (expense), net	168		68		261		297
Income before taxes	Income before taxes	30,747		7,994		42,722		13,984		Income before taxes	15,221		30,747		20,826		42,722
Income tax benefit		20		461		321		480
Income tax (provision) benefit										Income tax (provision) benefit	(336)		20		(524)		321
Net income	Net income	30,767		8,455		43,043		14,464		Net income	14,885		30,767		20,302		43,043
Net income attributable to noncontrolling interests:	Net income attributable to noncontrolling interests:									Net income attributable to noncontrolling interests:
Investment entities	Investment entities	(128)		—		(228)		—		Investment entities	(269)		(128)		(423)		(228)
Operating Partnership	Operating Partnership	(6,479)		(1,429)		(8,662)		(2,240)		Operating Partnership	(2,753)		(6,479)		(3,307)		(8,662)
Net income attributable to Armada Hoffler Properties, Inc.	Net income attributable to Armada Hoffler Properties, Inc.	24,160		7,026		34,153		12,224		Net income attributable to Armada Hoffler Properties, Inc.	11,863		24,160		16,572		34,153
Preferred stock dividends	Preferred stock dividends	(2,887)		(2,887)		(5,774)		(5,774)		Preferred stock dividends	(2,887)		(2,887)		(5,774)		(5,774)
Net income attributable to common stockholders	Net income attributable to common stockholders	$	21,273	$	4,139	$	28,379	$	6,450	Net income attributable to common stockholders	$	8,976	$	21,273	$	10,798	$	28,379
Net income attributable to common stockholders per share (basic and diluted)	Net income attributable to common stockholders per share (basic and diluted)	$	0.31	$	0.07	$	0.42	$	0.11	Net income attributable to common stockholders per share (basic and diluted)	$	0.13	$	0.31	$	0.16	$	0.42
Weighted-average common shares outstanding (basic and diluted)	Weighted-average common shares outstanding (basic and diluted)	67,710		60,409		67,420		59,918		Weighted-average common shares outstanding (basic and diluted)	67,901		67,710		67,844		67,420

Comprehensive income:	Comprehensive income:									Comprehensive income:
Net income	Net income	$	30,767	$	8,455	$	43,043	$	14,464	Net income	$	14,885	$	30,767	$	20,302	$	43,043
Unrealized cash flow hedge gains (losses)		3,950		(469)		11,672		1,807
Realized cash flow hedge losses reclassified to net income		866		1,103		1,653		2,181
Unrealized cash flow hedge gains										Unrealized cash flow hedge gains	6,806		3,950		6,380		11,672
Realized cash flow hedge (gains) losses reclassified to net income										Realized cash flow hedge (gains) losses reclassified to net income	(5,055)		866		(7,977)		1,653
Comprehensive income	Comprehensive income	35,583		9,089		56,368		18,452		Comprehensive income	16,636		35,583		18,705		56,368
Comprehensive income attributable to noncontrolling interests:	Comprehensive income attributable to noncontrolling interests:									Comprehensive income attributable to noncontrolling interests:
Investment entities	Investment entities	(228)		—		(328)		—		Investment entities	(245)		(228)		(363)		(328)
Operating Partnership	Operating Partnership	(7,579)		(1,592)		(11,762)		(3,274)		Operating Partnership	(3,169)		(7,579)		(2,951)		(11,762)
Comprehensive income attributable to Armada Hoffler Properties, Inc.	Comprehensive income attributable to Armada Hoffler Properties, Inc.	$	27,776	$	7,497	$	44,278	$	15,178	Comprehensive income attributable to Armada Hoffler Properties, Inc.	$	13,222	$	27,776	$	15,391	$	44,278

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Equity

(In thousands, except share data)

(Unaudited)


		Preferred stock		Common stock		Additional paid-in capital		Distributions in excess of earnings		Accumulated other comprehensive loss		Total stockholders' equity		Noncontrolling interests in investment entities		Noncontrolling interests in Operating Partnership		Total equity			Preferred stock		Common stock		Additional paid-in capital		Distributions in excess of earnings		Accumulated other comprehensive gain		Total stockholders' equity		Noncontrolling interests in investment entities		Noncontrolling interests in Operating Partnership		Total equity
Balance, December 31, 2021		$	171,085	$	630	$	525,030	$	(141,360)	$	(33)	$	555,352	$	629	$	223,842	$	779,823
Balance, December 31, 2022																				Balance, December 31, 2022	$	171,085	$	677	$	587,884	$	(126,875)	$	14,679	$	647,450	$	24,055	$	232,509	$	904,014

Net income																				Net income	—		—		—		4,709		—		4,709		154		554		5,417
Unrealized cash flow hedge gains (losses)																				Unrealized cash flow hedge gains (losses)	—		—		—		—		(328)		(328)		2		(100)		(426)
Realized cash flow hedge gains reclassified to net income																				Realized cash flow hedge gains reclassified to net income	—		—		—		—		(2,211)		(2,211)		(39)		(672)		(2,922)
Net proceeds from issuance of common stock																				Net proceeds from issuance of common stock	—		—		(149)		—		—		(149)		—		—		(149)

Restricted stock awards, net																				Restricted stock awards, net	—		2		977		—		—		979		—		—		979

Acquisitions of noncontrolling interests																				Acquisitions of noncontrolling interests	—		—		—		—		—		—		(12,834)		—		(12,834)

Distributions to noncontrolling interests																				Distributions to noncontrolling interests	—		—		—		—		—		—		(506)		—		(506)
Dividends declared on preferred stock																				Dividends declared on preferred stock	—		—		—		(2,887)		—		(2,887)		—		—		(2,887)
Dividends and distributions declared on common shares and units ($0.19 per share and unit)																				Dividends and distributions declared on common shares and units ($0.19 per share and unit)	—		—		—		(12,908)		—		(12,908)		—		(3,916)		(16,824)
Balance, March 31, 2023																				Balance, March 31, 2023	171,085		679		588,712		(137,961)		12,140		634,655		10,832		228,375		873,862
Net income	Net income	—		—		—		9,993		—		9,993		100		2,183		12,276		Net income	—		—		—		11,863		—		11,863		269		2,753		14,885
Unrealized cash flow hedge gains	Unrealized cash flow hedge gains	—		—		—		—		5,907		5,907		—		1,815		7,722		Unrealized cash flow hedge gains	—		—		—		—		5,093		5,093		151		1,562		6,806
Realized cash flow hedge losses reclassified to net income	Realized cash flow hedge losses reclassified to net income	—		—		—		—		602		602		—		185		787		Realized cash flow hedge losses reclassified to net income	—		—		—		—		(3,735)		(3,735)		(174)		(1,146)		(5,055)
Net proceeds from issuance of common stock		—		45		65,149		—		—		65,194		—		—		65,194
Noncontrolling interest in acquired real estate entity		—		—		—		—		—		—		23,065		—		23,065

Restricted stock awards, net	Restricted stock awards, net	—		—		1,064		—		—		1,064		—		—		1,064		Restricted stock awards, net	—		—		337		—		—		337		—		—		337

Acquisitions of noncontrolling interests		—		—		(3,901)		—		—		(3,901)		—		—		(3,901)
Issuance of operating partnership units for acquisitions																				Issuance of operating partnership units for acquisitions	—		—		—		—		—		—		—		12,194		12,194
Redemption of operating partnership units	Redemption of operating partnership units	—		—		132		—		—		132		—		(132)		—		Redemption of operating partnership units	—		—		(19)		—		—		(19)		—		(564)		(583)
Distributions to noncontrolling interests																				Distributions to noncontrolling interests	—		—		—		—		—		—		(427)		—		(427)

Dividends declared on preferred stock	Dividends declared on preferred stock	—		—		—		(2,887)		—		(2,887)		—		—		(2,887)		Dividends declared on preferred stock	—		—		—		(2,887)		—		(2,887)		—		—		(2,887)
Dividends and distributions declared on common shares and units ($0.17 per share and unit)		—		—		—		(11,433)		—		(11,433)		—		(3,506)		(14,939)
Balance, March 31, 2022		171,085		675		587,474		(145,687)		6,476		620,023		23,794		224,387		868,204
Net income		—		—		—		24,160		—		24,160		128		6,479		30,767
Unrealized cash flow hedge losses		—		—		—		—		2,986		2,986		55		909		3,950
Realized cash flow hedge losses reclassified to net income		—		—		—		1		629		630		45		191		866

Net proceeds from issuance of common stock		—		—		(35)		—		—		(35)		—		—		(35)
Restricted stock awards, net		—		2		573		—		—		575		—		—		575

Distributions to noncontrolling interests		—		—		—		—		—		—		(84)		—		(84)
Contributions from noncontrolling interests		—		—		—		—		—		—		14		—		14
Dividends declared on preferred stock		—		—		—		(2,887)		—		(2,887)		—		—		(2,887)
Dividends and distributions declared on common shares and units ($0.17 per share and unit)		—		—		—		(11,529)		—		(11,529)		—		(3,505)		(15,034)
Balance, June 30, 2022		$	171,085	$	677	$	588,012	$	(135,942)	$	10,091	$	633,923	$	23,952	$	228,461	$	886,336
Dividends and distributions declared on common shares and units ($0.195 per share and unit)																				Dividends and distributions declared on common shares and units ($0.195 per share and unit)	—		—		—		(13,248)		—		(13,248)		—		(4,222)		(17,470)
Balance, June 30, 2023																				Balance, June 30, 2023	$	171,085	$	679	$	589,030	$	(142,233)	$	13,498	$	632,059	$	10,651	$	238,952	$	881,662

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Preferred stock Common stock Additional paid-in capital Distributions in excess of earnings Accumulated other comprehensive loss Total stockholders' equity Noncontrolling interests in investment entities Noncontrolling interests in Operating Partnership Total equity
Balance, December 31, 2020 $ 171,085 $ 591 $ 472,747 $ (112,356) $ (8,868) $ 523,199 $ 488 $ 233,115 $ 756,802
Net income — — — 5,198 — 5,198 — 811 6,009
Unrealized cash flow hedge gains — — — — 1,685 1,685 — 591 2,276
Realized cash flow hedge losses reclassified to net income — — — — 798 798 — 280 1,078
Net proceeds from issuance of common stock — 7 8,974 — — 8,981 — — 8,981
Restricted stock awards, net — 1 631 — — 632 — — 632
Redemption of operating partnership units — — 131 — — 131 — (134) (3)
Dividends declared on preferred stock — — — (2,887) — (2,887) — — (2,887)
Dividends and distributions declared on common shares and units ($0.15 per share and unit) — — — (9,008) — (9,008) — (3,128) (12,136)
Balance, March 31, 2021 171,085 599 482,483 (119,053) (6,385) 528,729 488 231,535 760,752
Net income — — — 7,026 — 7,026 — 1,429 8,455
Unrealized cash flow hedge losses — — — — (349) (349) — (120) (469)
Realized cash flow hedge losses reclassified to net income — — — — 820 820 — 283 1,103
Net proceeds from issuance of common stock — 11 14,105 — — 14,116 — — 14,116
Restricted stock awards, net — — 473 — — 473 — — 473
Acquisition of noncontrolling interest in real estate entity — — (950) — — (950) 146 — (804)
Dividends declared on preferred stock — — — (2,887) — (2,887) — — (2,887)
Dividends and distributions declared on common shares and units ($0.16 per share and unit) — — — (9,783) — (9,783) — (3,337) (13,120)
Balance, June 30, 2021 $ 171,085 $ 610 $ 496,111 $ (124,697) $ (5,914) $ 537,195 $ 634 $ 229,790 $ 767,619


	Preferred stock		Common stock		Additional paid-in capital		Distributions in excess of earnings		Accumulated other comprehensive gain		Total stockholders' equity		Noncontrolling interests in investment entities		Noncontrolling interests in Operating Partnership		Total equity
Balance, December 31, 2021	$	171,085	$	630	$	525,030	$	(141,360)	$	(33)	$	555,352	$	629	$	223,842	$	779,823

Net income	—		—		—		9,993		—		9,993		100		2,183		12,276
Unrealized cash flow hedge gains	—		—		—		—		5,907		5,907		—		1,815		7,722
Realized cash flow hedge losses reclassified to net income	—		—		—		—		602		602		—		185		787
Net proceeds from issuance of common stock	—		45		65,149		—		—		65,194		—		—		65,194
Noncontrolling interest in acquired real estate entity	—		—		—		—		—		—		23,065		—		23,065
Restricted stock awards, net	—		—		1,064		—		—		1,064		—		—		1,064

Acquisitions of noncontrolling interests	—		—		(3,901)		—		—		(3,901)		—		—		(3,901)
Redemption of operating partnership units	—		—		132		—		—		132		—		(132)		—
Dividends declared on preferred stock	—		—		—		(2,887)		—		(2,887)		—		—		(2,887)
Dividends and distributions declared on common shares and units ($0.17 per share and unit)	—		—		—		(11,433)		—		(11,433)		—		(3,506)		(14,939)
Balance, March 31, 2022	171,085		675		587,474		(145,687)		6,476		620,023		23,794		224,387		868,204
Net income	—		—		—		24,160		—		24,160		128		6,479		30,767
Unrealized cash flow hedge losses	—		—		—		—		2,986		2,986		55		909		3,950
Realized cash flow hedge losses reclassified to net income	—		—		—		1		629		630		45		191		866

Net proceeds from issuance of common stock	—		—		(35)		—		—		(35)		—		—		(35)
Restricted stock awards, net	—		2		573		—		—		575		—		—		575



Distributions to noncontrolling interests	—		—		—		—		—		—		(84)		—		(84)
Contributions from noncontrolling interests	—		—		—		—		—		—		14		—		14
Dividends declared on preferred stock	—		—		—		(2,887)		—		(2,887)		—		—		(2,887)
Dividends and distributions declared on common shares and units ($0.17 per share and unit)	—		—		—		(11,529)		—		(11,529)		—		(3,505)		(15,034)
Balance, June 30, 2022	$	171,085	$	677	$	588,012	$	(135,942)	$	10,091	$	633,923	$	23,952	$	228,461	$	886,336

See Notes to Condensed Consolidated Financial Statements.

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ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Cash ~~Flows~~Flow

(In thousands)(Unaudited)


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income	Net income	$	43,043	$	14,464	Net income	$	20,302	$	43,043
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of buildings and tenant improvements	Depreciation of buildings and tenant improvements	27,613		25,209		Depreciation of buildings and tenant improvements	29,262		27,613
Amortization of leasing costs, in-place lease intangibles and below market ground rents - operating leases	Amortization of leasing costs, in-place lease intangibles and below market ground rents - operating leases	9,725		10,142		Amortization of leasing costs, in-place lease intangibles and below market ground rents - operating leases	9,084		9,725
Accrued straight-line rental revenue	Accrued straight-line rental revenue	(3,036)		(3,327)		Accrued straight-line rental revenue	(3,244)		(3,036)
Amortization of leasing incentives and above or below-market rents	Amortization of leasing incentives and above or below-market rents	(520)		(508)		Amortization of leasing incentives and above or below-market rents	(1,360)		(520)
Amortization of right-of-use assets - finance leases	Amortization of right-of-use assets - finance leases	555		467		Amortization of right-of-use assets - finance leases	624		555
Accrued straight-line ground rent expense	Accrued straight-line ground rent expense	76		81		Accrued straight-line ground rent expense	40		76
Unrealized credit loss provision	Unrealized credit loss provision	900		333		Unrealized credit loss provision	177		900
Adjustment for uncollectable lease accounts	Adjustment for uncollectable lease accounts	405		562		Adjustment for uncollectable lease accounts	1,168		405
Noncash stock compensation	Noncash stock compensation	2,115		1,440		Noncash stock compensation	2,137		2,115
Impairment charges	Impairment charges	333		3,122		Impairment charges	102		333
Noncash interest expense	Noncash interest expense	2,143		1,329		Noncash interest expense	4,412		2,143
Noncash loss on extinguishment of debt	Noncash loss on extinguishment of debt	776		—		Noncash loss on extinguishment of debt	—		776
Gain on real estate dispositions, net	Gain on real estate dispositions, net	(19,493)		(3,717)		Gain on real estate dispositions, net	(511)		(19,493)

Change in fair value of derivatives and other	Change in fair value of derivatives and other	(6,730)		(707)		Change in fair value of derivatives and other	(490)		(6,730)

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Property assets	Property assets	(8,243)		(1,469)		Property assets	(792)		(8,243)
Property liabilities	Property liabilities	(2,429)		(2,968)		Property liabilities	(592)		(2,429)
Construction assets	Construction assets	(18,005)		26,865		Construction assets	(24,282)		(18,005)
Construction liabilities	Construction liabilities	25,205		(34,645)		Construction liabilities	10,969		25,205
Interest receivable	Interest receivable	(4,026)		3,967		Interest receivable	(6,545)		(4,026)
Net cash provided by operating activities	Net cash provided by operating activities	50,407		40,640		Net cash provided by operating activities	40,461		50,407
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Development of real estate investments	Development of real estate investments	(35,478)		(19,476)		Development of real estate investments	(30,959)		(35,478)
Tenant and building improvements	Tenant and building improvements	(8,467)		(4,817)		Tenant and building improvements	(9,912)		(8,467)
Acquisitions of real estate investments, net of cash received	Acquisitions of real estate investments, net of cash received	(93,313)		(28,173)		Acquisitions of real estate investments, net of cash received	(8,355)		(93,313)
Dispositions of real estate investments, net of selling costs	Dispositions of real estate investments, net of selling costs	101,812		9,156		Dispositions of real estate investments, net of selling costs	(20)		101,812
Notes receivable issuances	Notes receivable issuances	(20,829)		(19,796)		Notes receivable issuances	(21,238)		(20,829)
Notes receivable paydowns	Notes receivable paydowns	11,545		38,490		Notes receivable paydowns	—		11,545
Leasing costs	Leasing costs	(1,836)		(1,068)		Leasing costs	(2,348)		(1,836)
Leasing incentives	Leasing incentives	(51)		—		Leasing incentives	(20)		(51)
Contributions to equity method investments	Contributions to equity method investments	(40,333)		(5,921)		Contributions to equity method investments	(30,388)		(40,333)
Net cash used for investing activities	Net cash used for investing activities	(86,950)		(31,605)		Net cash used for investing activities	(103,240)		(86,950)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES

Proceeds from issuance of common stock, net		65,159		23,097
Proceeds from issuance of common stock, net of issuance cost						Proceeds from issuance of common stock, net of issuance cost	(149)		65,159
Common shares tendered for tax withholding	Common shares tendered for tax withholding	(774)		(553)		Common shares tendered for tax withholding	(1,110)		(774)

Debt issuances, credit facility and construction loan borrowings	Debt issuances, credit facility and construction loan borrowings	324,096		19,119		Debt issuances, credit facility and construction loan borrowings	229,783		324,096
Debt and credit facility repayments, including principal amortization	Debt and credit facility repayments, including principal amortization	(273,698)		(18,379)		Debt and credit facility repayments, including principal amortization	(138,953)		(273,698)
Debt issuance costs	Debt issuance costs	(3,303)		(2,024)		Debt issuance costs	(1,661)		(3,303)

Acquisition of NCI in consolidated RE investments	Acquisition of NCI in consolidated RE investments	(3,901)		(804)		Acquisition of NCI in consolidated RE investments	—		(3,901)

Redemption of operating partnership units						Redemption of operating partnership units	(583)		—
Distributions to noncontrolling interests	Distributions to noncontrolling interests	(84)		—		Distributions to noncontrolling interests	(933)		(84)
Contributions from noncontrolling interests	Contributions from noncontrolling interests	14		—		Contributions from noncontrolling interests	—		14
Dividends and distributions	Dividends and distributions	(34,997)		(26,679)		Dividends and distributions	(39,383)		(34,997)
Net cash provided by (used for) financing activities		72,512		(6,223)
Net increase in cash, cash equivalents, and restricted cash		35,969		2,812
Net cash provided by financing activities						Net cash provided by financing activities	47,011		72,512
Net (decrease) increase in cash, cash equivalents, and restricted cash						Net (decrease) increase in cash, cash equivalents, and restricted cash	(15,768)		35,969
Cash, cash equivalents, and restricted cash, beginning of period	Cash, cash equivalents, and restricted cash, beginning of period	40,443		50,430		Cash, cash equivalents, and restricted cash, beginning of period	51,865		40,443
Cash, cash equivalents, and restricted cash, end of period (1)	Cash, cash equivalents, and restricted cash, end of period (1)	$	76,412	$	53,242	Cash, cash equivalents, and restricted cash, end of period (1)	$	36,097	$	76,412

See Notes to Condensed Consolidated Financial Statements.

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ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Cash Flows (Continued)

(In thousands)(Unaudited)


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Supplemental Disclosures (noncash transactions):	Supplemental Disclosures (noncash transactions):					Supplemental Disclosures (noncash transactions):
Increase in dividends and distributions payable	Increase in dividends and distributions payable	$	750	$	4,351	Increase in dividends and distributions payable	$	685	$	750
Increase (decrease) in accrued capital improvements and development costs		(2,626)		2,058
Decrease in accrued capital improvements and development costs						Decrease in accrued capital improvements and development costs	(2,126)		(2,626)

Issuance of operating partnership units for acquisitions						Issuance of operating partnership units for acquisitions	12,194		—
Operating Partnership units redeemed for common shares	Operating Partnership units redeemed for common shares	132		131		Operating Partnership units redeemed for common shares	—		132

Debt assumed at fair value in conjunction with real estate purchases	Debt assumed at fair value in conjunction with real estate purchases	156,071		—		Debt assumed at fair value in conjunction with real estate purchases	105,584		156,071

Note receivable redeemed in conjunction with real estate purchase						Note receivable redeemed in conjunction with real estate purchase	90,232		—

Acquisitions of noncontrolling interests						Acquisitions of noncontrolling interests	12,834		—
Noncontrolling interest in acquired real estate entity	Noncontrolling interest in acquired real estate entity	23,065		—		Noncontrolling interest in acquired real estate entity	—		23,065
Other liability satisfied in connection with a real estate disposal						Other liability satisfied in connection with a real estate disposal	750		—

Recognition of finance lease right-of-use assets	Recognition of finance lease right-of-use assets	—		24,466		Recognition of finance lease right-of-use assets	47,742		—
Recognition of finance lease liabilities	Recognition of finance lease liabilities	—		27,940		Recognition of finance lease liabilities	46,616		—

(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Statements of Cash Flows (in thousands):


		June 30, 2022		June 30, 2021			June 30, 2023		June 30, 2022
Cash and cash equivalents	Cash and cash equivalents	$	69,731	$	43,493	Cash and cash equivalents	$	34,054	$	69,731
Restricted cash (a)	Restricted cash (a)	6,681		9,749		Restricted cash (a)	2,043		6,681
Cash, cash equivalents, and restricted cash	Cash, cash equivalents, and restricted cash	$	76,412	$	53,242	Cash, cash equivalents, and restricted cash	$	36,097	$	76,412

(a) Restricted cash represents amounts held by lenders for real estate taxes, insurance, and reserves for capital improvements.

See Notes to Condensed Consolidated Financial Statements.

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ARMADA HOFFLER PROPERTIES, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Business of Organization

Armada Hoffler Properties, Inc. (the "Company") is a ~~full-service~~vertically integrated, self-managed real estate ~~company~~investment trust ("REIT") with ~~extensive~~over four decades of experience developing, building, ~~owning,~~acquiring, and managing high-quality ~~institutional-grade~~multifamily, office, and retail ~~and multifamily~~ properties ~~in attractive markets~~located primarily ~~throughout~~in the Mid-Atlantic and Southeastern United States. The Company also provides general construction and development services to third-party clients, in addition to developing and building properties to be placed in their stabilized portfolio.

The Company is ~~a real estate investment trust ("REIT"),~~ the sole general partner of Armada Hoffler, L.P. (the "Operating Partnership") and, as of June 30, ~~2022,~~2023, owned ~~76.7%~~75.8% 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 thereof.

As of June 30, ~~2022,~~2023, the Company's property portfolio consisted of 5560 stabilized operating properties and ~~4 properties either~~one property under ~~development or not yet stabilized.~~development.

Refer to Note 5 for information related to the Company's recent acquisitions and dispositions of properties.

2. Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles ("GAAP").

The condensed consolidated financial statements include the financial position and results of operations of the Company and its ~~consolidated~~subsidiaries. The Company’s subsidiaries ~~including~~include the Operating Partnership ~~its wholly-owned~~and the subsidiaries ~~and any interests~~that are wholly owned or in ~~variable~~which the Company has a controlling interest, ~~entities ("VIEs")~~including where the Company has been determined to be a primary beneficiary of a variable interest entity (“VIE”) in accordance with the ~~primary beneficiary.~~consolidation guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). All significant intercompany transactions and balances have been eliminated in consolidation.

In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for the fair presentation of the financial condition, and results of operations for the interim periods presented.

The accompanying condensed consolidated financial statements were prepared in accordance with the requirements for interim financial information. Accordingly, these interim financial statements have not been audited and exclude certain disclosures required for annual financial statements. Also, the operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These interim financial statements should be read in conjunction with the audited consolidated financial statements of the Company included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

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 significantly from management’s estimates.

Reclassifications

Certain items have been reclassified from their prior year classifications to conform to the current year presentation. ~~These reclassifications had no effect on net income or stockholders' equity as previously reported.~~

Effective for the six months ended June 30, 2023, the Company has changed the presentation of its Consolidated Statements of Comprehensive Income. For the three and six months ended June 30, 2022, the Company reclassified interest

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~~Recent Accounting Pronouncements~~income of $3.4 million and $6.9 million, respectively, from non-operating income to operating income. As a result, total revenues and operating income increased by $3.4 million and $6.9 million, respectively, compared to previous reporting. These reclassifications had no effect on net income or stockholder's equity as previously reported.

Recent Accounting ~~Standards Adopted in 2022~~Pronouncements

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board ("FASB") issued ~~ASU~~Accounting Standards Update ("ASU") 2020-04 Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848), which became effective on March 12, ~~2020 and generally can be applied through December 31, 2022.~~2020. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. This ~~Accounting Standards Update ("ASU")~~ASU also provides optional expedients to enable companies to continue to apply hedge accounting to certain hedging relationships impacted by reference rate reform. Application of the guidance is optional and only available in certain situations. In January 2021, FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848). The amendments in this standard are elective and principally apply to entities that have derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. Similar to ASU No. 2020-04, provisions of this ASU are effective upon ~~issuance and generally can be applied through~~issuance. In December 2022, FASB issued ASU 2022-06 Deferral of the Sunset Date of Topic 848 which became effective immediately upon issuance. ASU 2022-06 deferred the sunset date of Topic 848 to December 31, ~~2022.~~2024. During the six months ended June 30, ~~2022,~~2023, the Company elected to apply the practical expedients to modifications of qualifying contracts as continuations of the existing contracts rather than as new contracts. The adoption of the new guidance did not have a material impact on the consolidated financial statements. ~~Management will continue to evaluate the impacts of reference rate reform.~~

~~Earnings Per Share~~

In August 2020, FASB issued ASU 2020-06 an update to ASC Topic 470 and ASC Topic 815, which became effective January 1, 2022. ASU 2020-06 simplifies the accounting for convertible instruments and removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception. This ASU also simplifies diluted earnings per share calculation in certain areas and provides updated disclosure requirements. The Company adopted ASU 2020-06 effective January 1, 2022 and the adoption did not have a material impact on the consolidated financial statements.

Other Accounting Policies

See the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 for a description of other accounting principles upon which basis the accompanying consolidated financial statements were prepared.

3. Segments

The Company operates its business in five reportable segments: (i) office real estate, (ii) retail real estate, (iii) multifamily real estate, (iv) general contracting and real estate services, and (v) real estate financing. Refer to Note 1 of the Company's Form 10-K for the composition of properties within each property segment. Since the Company's Annual Report on Form 10-K for the year ended December 31, 2022, the Company introduced real estate financing as a reportable segment. The real estate financing segment includes the Company's mezzanine loans and preferred equity investments on development projects. The change in segmental presentation is a result of the chief operating decision-maker now separately reviewing the results of the real estate financing investments, which are no longer considered to be ad hoc investments, but an evolving portfolio.

Net operating income ~~(segment revenues minus segment expenses)~~("NOI") is the primary measure used by the Company’s chief operating decision-maker to assess segment performance. ~~Net operating~~NOI is calculated as segment revenues less segment expenses. Segment revenues include rental revenues for the property segments, general contracting and real estate services revenues for the general contracting and real estate services segment, and interest income for the real estate financing segment. Segment expenses include rental expenses and real estate taxes for the property segments, general contracting and real estate services expenses for the general contracting and real estate services segment, and interest expense for the real estate financing segment. Segment NOI for the general contracting and real estate services and real estate financing segments is also referred to as segment gross profit as illustrated in the table below. 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, ~~net operating income~~NOI should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate ~~net operating income~~NOI in the same manner. The Company considers ~~net operating income~~NOI 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, construction, and ~~construction~~real estate financing businesses.

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The following table presents NOI for the Company's five reportable segments for the three and six months ended June 30, 2023 and 2022 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Office real estate
Rental revenues	$	20,505	$	18,314	$	40,079	$	35,337
Rental expenses	5,254		4,600		10,357		8,740
Real estate taxes	2,167		2,035		4,262		3,539
Segment net operating income	13,084		11,679		25,460		23,058
Retail real estate
Rental revenues	24,708		21,544		47,146		42,974
Rental expenses	4,026		3,333		7,590		6,834
Real estate taxes	2,270		2,271		4,477		4,509
Segment net operating income	18,412		15,940		35,079		31,631
Multifamily real estate
Rental revenues	14,738		15,366		28,944		31,548
Rental expenses	4,396		4,752		8,689		9,780
Real estate taxes	1,194		1,531		2,304		3,193
Segment net operating income	9,148		9,083		17,951		18,575
General contracting and real estate services
General contracting and real estate services revenues	102,574		45,273		186,812		69,923
General contracting and real estate services expenses	99,071		43,418		180,241		67,239
Segment gross profit	3,503		1,855		6,571		2,684
Real estate financing
Interest income	3,225		3,239		6,761		6,698
Interest expense(a)	809		817		1,906		1,642
Segment gross profit	2,416		2,422		4,855		5,056
Net operating income	$	46,563	$	40,979	$	89,916	$	81,004

(a) Interest expense within the real estate financing segment is allocated based on the average outstanding principal of notes receivable in the real estate financing portfolio, and the effective interest rate on the credit facility, as defined in Note 8.

The following table reconciles NOI to net income, the most directly comparable GAAP measure, for the three and six months ended June 30, 2023 and 2022 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net operating income	$	46,563	$	40,979	$	89,916	$	81,004
Interest income(a)	189		113		372		222
Depreciation and amortization	(19,878)		(18,781)		(38,346)		(37,338)
Amortization of right-of-use assets - finance leases	(347)		(277)		(624)		(555)
General and administrative expenses	(4,052)		(3,617)		(9,500)		(8,325)
Acquisition, development and other pursuit costs	(18)		(26)		(18)		(37)
Impairment charges	—		(286)		(102)		(333)
Gain on real estate dispositions, net	511		19,493		511		19,493
Interest expense(b)	(12,820)		(8,554)		(24,025)		(16,760)

Loss on extinguishment of debt	—		(618)		—		(776)
Change in fair value of derivatives and other	5,005		2,548		2,558		6,730
Unrealized credit loss provision	(100)		(295)		(177)		(900)
Other income (expense), net	168		68		261		297
Income tax (provision) benefit	(336)		20		(524)		321
Net income	$	14,885	$	30,767	$	20,302	$	43,043

(a) Excludes real estate financing segment interest income of $3.2 million for each of the three months ended June 30, 2023 and 2022 and

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~~Net operating income of the Company’s reportable segments~~$6.8 million and $6.7 million for the ~~three and~~ six months ended June 30, 2023 and 2022, respectively.

(b) Excludes real estate financing segment interest expense of $0.8 million for each of the three months ended June 30, 2023 and 2022 and ~~2021 was as follows (in thousands):~~ $1.9 million and $1.6 million for the six months ended June 30, 2023 and 2022, respectively.

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Office real estate
Rental revenues $ 18,314 $ 11,756 $ 35,337 $ 23,391
Rental expenses 4,600 2,938 8,740 5,813
Real estate taxes 2,035 1,413 3,539 2,771
Segment net operating income 11,679 7,405 23,058 14,807
Retail real estate
Rental revenues 21,544 19,204 42,974 37,459
Rental expenses 3,333 3,013 6,834 5,849
Real estate taxes 2,271 2,180 4,509 4,207
Segment net operating income 15,940 14,011 31,631 27,403
Multifamily residential real estate
Rental revenues 15,366 16,418 31,548 32,269
Rental expenses 4,752 5,341 9,780 10,462
Real estate taxes 1,531 1,872 3,193 3,793
Segment net operating income 9,083 9,205 18,575 18,014
General contracting and real estate services
Segment revenues 45,273 18,408 69,923 53,971
Segment expenses 43,418 18,131 67,239 52,406
Segment gross profit 1,855 277 2,684 1,565
Net operating income $ 38,557 $ 30,898 $ 75,948 $ 61,789

Rental expenses represent costs directly associated with the operation and management of the Company’s real estate properties. Rental expenses include asset management expenses, property management fees, repairs and maintenance, insurance, and utilities.

General contracting and real estate services revenues for the three months ended June 30, 2023 and 2022 ~~and 2021~~ exclude ~~revenue~~revenues related to intercompany construction contracts of $12.9 million and $14.2 million, ~~and $5.4 million,~~ respectively, ~~as it is~~which are eliminated in consolidation. General contracting and real estate services revenues for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 exclude revenue related to intercompany construction contracts of $26.6 million and $22.8 million, ~~and $7.4 million, respectively, as it is eliminated in consolidation.~~respectively.

General contracting and real estate services expenses for the three months ended June 30, ~~2022~~2023 and ~~2021~~2022 exclude expenses related to intercompany construction contracts of $12.8 million and $14.0 million, ~~and $5.4 million, respectively.~~respectively, which are eliminated in consolidation. General contracting and real estate services expenses for the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 exclude expenses related to intercompany construction contracts of $26.3 million and $22.5 million, respectively.

Depreciation and ~~$7.4 million, respectively, as it is eliminated in consolidation.~~

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~~The following table reconciles net operating income to net income, the most directly comparable GAAP measure,~~amortization expense for the three months ended June 30, 2023 was $7.6 million, $7.8 million, and $4.3 million for the office, retail, and multifamily real estate segments, respectively. Depreciation and amortization expense for the three months ended June 30, 2022 was $6.9 million, $7.0 million, and $4.8 million for the office, retail, and multifamily real estate segments, respectively. Depreciation and amortization expense for the six months ended June 30, 2023 was $14.5 million, $15.1 million, and $8.5 million for the office, retail, and multifamily real estate segments, respectively. Depreciation and amortization expense for the six months ended June 30, 2022 was $13.5 million, $14.2 million, and ~~2021 (in thousands):~~ $9.5 million for the office, retail, and multifamily real estate segments, respectively.

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Net operating income $ 38,557 $ 30,898 $ 75,948 $ 61,789
Depreciation and amortization (18,781) (17,285) (37,338) (35,351)
Amortization of right-of-use assets - finance leases (277) (278) (555) (467)
General and administrative expenses (3,617) (3,487) (8,325) (7,508)
Acquisition, development and other pursuit costs (26) (32) (37) (103)
Impairment charges (286) (83) (333) (3,122)
Gain on real estate dispositions, net 19,493 — 19,493 3,717
Interest income 3,352 6,746 6,920 10,862
Interest expense (9,371) (8,418) (18,402) (16,393)
Loss on extinguishment of debt (618) — (776) —
Change in fair value of derivatives and other 2,548 314 6,730 707
Unrealized credit loss provision (295) (388) (900) (333)
Other income (expense), net 68 7 297 186
Income tax benefit 20 461 321 480
Net income $ 30,767 $ 8,455 $ 43,043 $ 14,464

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, and real estate financing businesses. These costs include corporate office personnel compensation and benefits, bank fees, accounting fees, legal fees, and other corporate office expenses.

Interest expense on secured property debt for the three months ended June 30, 2023 was $2.2 million, $2.3 million, and $2.6 million for the office, retail, and multifamily real estate segments, respectively. Interest expense on secured property debt for the three months ended June 30, 2022 was $2.7 million, $2.0 million, and $3.3 million for the office, retail, and multifamily real estate segments, respectively. Interest expense on secured property debt for the six months ended June 30, 2023 was $4.6 million, $4.4 million, and $5.2 million for the office, retail, and multifamily real estate segments, respectively. Interest expense on secured property debt for the six months ended June 30, 2022 was $4.8 million, $4.0 million, and $6.5 million for the office, retail, and multifamily real estate segments, respectively.

Assets included in each property segment are presented in Schedule III of the financial statements accompanying the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which have only materially changed as of June 30, 2023 in respect to the acquisition of The Interlock. Refer to Note 5 for the allocation of The Interlock's assets by property segment. Assets attributable to the general contracting and real estate services segment are presented in Note 7 of these financial statements. Assets of the real estate financing segment are presented in Note 6 of these financial statements.

4. Leases

Lessee Disclosures

As a lessee, the Company has 8nine ground leases on 7nine properties. These ground leases have maximum lease terms (including renewal options) that expire between 2074 and 2117. 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~~Five of these leases have been classified as operating leases and 3four 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.

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

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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 include 1one or more options to renew, with renewal terms that can extend the lease term from one to 25 years, or more. The exercise 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 assured.

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Rental revenue for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 comprised the following (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Base rent and tenant charges	Base rent and tenant charges	$	53,424	$	45,686	$	106,303	$	89,284	Base rent and tenant charges	$	57,093	$	53,424	$	111,564	$	106,303
Accrued straight-line rental adjustment	Accrued straight-line rental adjustment	1,544		1,436		3,036		3,327		Accrued straight-line rental adjustment	1,788		1,544		3,243		3,036
Lease incentive amortization	Lease incentive amortization	(173)		(159)		(346)		(318)		Lease incentive amortization	(150)		(173)		(315)		(346)
Above/below market lease amortization		429		415		866		826
(Above) below market lease amortization										(Above) below market lease amortization	1,220		429		1,677		866
Total rental revenue	Total rental revenue	$	55,224	$	47,378	$	109,859	$	93,119	Total rental revenue	$	59,951	$	55,224	$	116,169	$	109,859

5. Real Estate Investment

Property Acquisitions

~~Exelon~~Constellation Energy Building

On January 14, ~~2022,~~2023, the Company acquired ~~a 79% membership interest and~~ an additional 11% ~~economic~~membership interest in the ~~partnership~~Constellation Energy Building, increasing its ownership interest to 90%, in exchange for full satisfaction of the $12.8 million loan that ~~owns~~was extended to the ~~Exelon Building~~seller upon the acquisition of the property in January 2022.

The Interlock

On May 19, 2023, the Company acquired The Interlock, a 311,000 square foot Class A commercial mixed-use asset in West Midtown Atlanta anchored by Georgia Tech. The Interlock consists of office and retail space as well as structured parking. For segment reporting purposes, management has separated office and retail components of The Interlock into two operating properties respectively presented in the office and retail real estate segments. The Company acquired the asset for ~~a purchase price~~total consideration of ~~approximately $92.2~~$214.1 million plus capitalized acquisition costs of $1.2 million. As part of this acquisition, the Company paid $6.1 million in cash, ~~and a~~redeemed its outstanding $90.2 million mezzanine loan, issued $12.2 million of Class A units of limited partnership interest in the Operating Partnership ("Class A Units") to the seller, and assumed the asset's senior construction loan of ~~$12.8 million. The Exelon Building is a mixed-use structure located in Baltimore's Harbor Point and is comprised of an office building, the Exelon Office,~~$105.6 million, that ~~serves as the headquarters for Constellation Energy Corp., which~~ was spun-off from Exelon, a Fortune 100 energy company, in February 2022, as well as a multifamily component, 1305 Dock Street. The Exelon Office includes a parking garage and retail space. The Exelon Building was subject to a $156.1 million loan, which the Company immediately refinanced followingpaid off on the acquisition ~~with a new $175.0 million loan. The new loan bears interest at a rate~~date using the proceeds of the ~~Bloomberg Short-Term Bank Yield Index ("BSBY") plus a spread of 1.50%~~TD term loan facility and ~~will mature on November 1, 2026. This loan is hedged~~an increase in borrowings under the revolving credit facility, both defined in Note 8. The Company also assumed the leasehold interest in the underlying land owned by Georgia Tech. The ground lease has an ~~interest rate cap corridor of 1.00% and 3.00% as well as an interest rate cap of 4.00%. See Note 9 for further details.~~

expiration in 2117 after considering renewal options.

The following table summarizes the purchase price allocation (including acquisition costs) based on the relative fair value of the assets acquired for the 2 operating ~~properties~~property purchased during the six months ended June 30, ~~2022~~2023 (in thousands):

~~Exelon Building~~The Interlock(1)

~~Land~~

~~23,317~~

~~Site improvements~~

~~141~~

Building

~~194,916~~$

183,907

In-place leases

~~53,705~~35,234

Above-market leases

~~306~~ 62

Below-market leases

(3,931)

Finance lease right-of-use assets(2)

46,616

Finance lease liabilities

(46,616)

Net assets acquired

~~272,385~~215,272

~~Ten Tryon~~

~~On January 14, 2022,~~(1) The net assets acquired attributable to the Company acquired the remaining 20% ownership interest in the entity that is developing the Ten Tryon project in Charlotte, North Carolina for a cash payment of $3.9 million. The Company recorded the amount as an adjustment to additional paid-in-capital.

~~The Residences at Annapolis Junction~~

On April 11, 2022, the Company exercised its option to acquire an additional 16% of the partnership that owns The Residences at Annapolis Junction, increasing its ownership to 95%. In exchange for this increased partnership interest, the terms of the partnership waterfall calculation in the event of a capital event have been modified.

~~Property Dispositions~~

~~On April 1, 2022, the Company completed the sale of Hoffler Place for a sale price of $43.1 million. The loss recognized upon sale was $0.8 million.~~

~~On April 25, 2022, the Company completed the sale of Summit Place for a sale price of $37.8 million. The loss recognized upon sale was $0.5 million.~~office and retail real estate segments were $134.6 million and $80.6 million, respectively.

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~~In addition to~~(2) Excludes $1.1 million of rent for the ~~losses~~finance lease, which was prepaid on the acquisition date. The total finance lease right-of-use asset recognized on the sales of the Hoffler Place and Summit Place student-housing properties during the three months ended June 30, 2022 described above, the Company recognized impairment of real estate of $18.3 million to record these propertiesacquisition date was $47.7 million.

Property Disposition

Market at ~~their fair values during the three months ended December 31, 2021.~~Mill Creek

On ~~June 29, 2022,~~April 11, 2023, the Company completed the sale of a non-operating outparcel at Market at Mill Creek in full satisfaction of the ~~Home Depot and Costco outparcels at North Pointe~~outstanding consideration payable for ~~a sale price~~the acquisition of ~~$23.9 million.~~the noncontrolling interest in the property completed on December 31, 2022. The gain recorded on this disposition was ~~$20.9~~$0.5 million.

~~Real Estate Held for Sale~~

As of June 30, 2022, the Company had classified The Residences at Annapolis Junction and the AutoZone and Valvoline outparcels at Sandbridge Commons in real estate investments held for sale. Subsequent to June 30, 2022, the Company sold these properties. See Note 15 for more information.

Equity Method Investments

Harbor Point Parcel 3

The Company owns a 50% interest in Harbor Point Parcel 3, a joint venture with Beatty Development Group, for purposes of developing T. Rowe Price's new global headquarters office building in Baltimore, Maryland. The Company is a noncontrolling partner in the joint venture and will serve as the project's general contractor. During the six months ended June 30, ~~2022,~~2023, the Company invested ~~$21.1~~$1.0 million in Harbor Point Parcel 3. The Company has an estimated equity commitment of up to ~~$39.0~~$44.6 million relating to this project. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the carrying value of the Company's investment in Harbor Point Parcel 3 was ~~$33.8~~$40.8 million and ~~$12.7~~$39.8 million, ~~respectively.~~respectively, which excludes $1.5 million and $0.9 million, respectively, of intra-entity profits eliminated in consolidation. For the six months ended June 30, 2023 and 2022, Harbor Point Parcel 3 had no operating ~~activity, and~~activity; therefore, the Company received no allocated income.

Based on the terms of the operating agreement, the Company has concluded that Harbor Point Parcel 3 is a VIE and that the Company holds a variable interest. The Company has significant influence over the project due to its 50% ~~ownership;~~ownership interest; however, the Company does not have the power to direct the activities of the project that most significantly impact its performance. This includes activity as the managing member of the entity, which is a power that is retained by the Company's joint venture partner. Accordingly, the Company is not the project's primary beneficiary and, therefore, does not consolidate Harbor Point Parcel 3 in its consolidated financial statements. The Company's investment in the project is recorded as an equity method investment in the consolidated balance sheets.

Harbor Point Parcel 4

On April 1, 2022, the Company acquired a 78% interest in Harbor Point Parcel 4, a real estate venture with Beatty Development Group, for purposes of developing a mixed-use project ("Allied | Harbor Point"), which is planned to include multifamily units, retail space, and a parking garage. The Company holds an option to increase its ownership to 90%. The Company is a noncontrolling partner in the real estate venture and will serve as the project's general contractor. During the six months ended June 30, ~~2022,~~2023, the Company invested ~~$19.7~~$29.4 million in Harbor Point Parcel 4. The Company has an estimated equity commitment of up to ~~$100.0~~$108.9 million relating to this project. As of June 30, 2023 and December 31, 2022, the carrying value of the Company's investment in Harbor Point Parcel 4 was ~~$19.7 million.~~$61.6 million and $32.2 million, respectively, which excludes $0.4 million and $0.2 million, respectively, of intra-entity profits eliminated in consolidation. For the six months ended June 30, ~~2022,~~2023, Harbor Point Parcel 4 had no operating ~~activity, and~~activity; therefore, the Company received no allocated income.

Based on the terms of the operating agreement, the Company has concluded that Harbor Point Parcel 4 is a VIE and that the Company holds a variable interest. The Company has significant influence over the project due to its 78% ~~ownership;~~ownership interest; however, the Company does not have the power to direct the activities of the project that most significantly impact its performance. This includes activity as the managing member of the entity, which is a power that is retained by the Company's partner. Accordingly, the Company is not the project's primary beneficiary and, therefore, does not consolidate Harbor Point Parcel 4 in its consolidated financial statements. The Company's investment in the project is recorded as an equity method investment in the consolidated balance sheets.

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6. Notes Receivable and Current Expected Credit Losses

Notes Receivable

The Company had the following notes receivable outstanding as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 ($ in thousands):


		Outstanding loan amount (a)										Interest compounding		Outstanding loan amount												Interest compounding
Development Project	Development Project	June 30, 2022			December 31, 2021		Maximum loan commitment			Interest rate			Development Project	June 30, 2023			December 31, 2022			Maximum principal commitment			Interest rate
City Park 2		$	8,014		$	—	$	20,594		13.0	%	Annually
Interlock Commercial		86,334			95,379		107,000		(b)	15.0	%	None
Nexton Multifamily		24,853			23,567		22,315			11.0	%	Annually
Solis City Park II													Solis City Park II	$	22,828	(a)	$	19,062	(a)	$	20,594		13.0	%		Annually
Solis Gainesville II													Solis Gainesville II	19,327		(a)	6,638		(a)	19,595			14.0	%	(b)	Annually
Solis Kennesaw													Solis Kennesaw	7,330		(a)	—			37,870			14.0	%	(b)	Annually
The Interlock(c)													The Interlock(c)	—			86,584		(a)	107,000		(d)	15.0	%		None
Total mezzanine & preferred equity	Total mezzanine & preferred equity	119,201			118,946		$	149,909					Total mezzanine & preferred equity	49,485			112,284			$	185,059
Exelon note receivable		12,834			—
Constellation Energy Building note receivable													Constellation Energy Building note receivable	—			12,834
Other notes receivable	Other notes receivable	7,455			7,234								Other notes receivable	11,849		(a)	11,512		(a)
Notes receivable guarantee premium	Notes receivable guarantee premium	1,345			1,243								Notes receivable guarantee premium	—			701
Allowance for credit losses		(1,452)		(c)	(994)
Allowance for credit losses(e)													Allowance for credit losses(e)	(1,239)			(1,292)

Total notes receivable	Total notes receivable	$	139,383		$	126,429							Total notes receivable	$	60,095		$	136,039

(a) Outstanding loan amounts include any accrued and unpaid interest, and accrued exit fees, as applicable.

(b) The interest rate varies over the life of the loans, and the Company also earns an unused commitment fee. Refer below under “Solis Gainesville II” and “Solis Kennesaw” for further details.

(c) This note receivable was redeemed on May 19, 2023 in connection with the Company’s acquisition of The Interlock. Refer below under “The Interlock” for further details.

(d) This amount includes interest reserves.

~~(c)~~(e) The ~~amount excludes $0.5~~amounts as of June 30, 2023 and December 31, 2022 exclude $0.6 million and $0.3 million of Current Expected Credit Losses ~~("CECL"~~(“CECL”) allowance that relates to the unfunded commitments, which ~~was~~were recorded as a liability under Other liabilities in the consolidated balance ~~sheet.~~sheets.

Interest on the notes receivable 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 generally added to the loan receivable balances. The Company recognized interest income for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 as follows (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
Development Project	Development Project	2022			2021			2022			2021			Development Project	2023			2022			2023			2022

City Park 2		$	206	(a)	$	—		$	224	(a)	$	—
Interlock Commercial		2,361		(a)	3,310		(a)	5,187		(a)	6,384		(a)
Solis City Park II														Solis City Park II	$	732	(a)	$	206	(a)	$	1,402	(a)	$	224	(a)
Solis Gainesville II														Solis Gainesville II	654		(a)(b)	—			1,247		(a)(b)	—
Solis Kennesaw														Solis Kennesaw	465		(a)	—			465		(a)	—
The Interlock														The Interlock	1,374		(a)	2,361		(a)	3,647		(a)	5,187		(a)
Nexton Multifamily	Nexton Multifamily	672			261			1,286			261			Nexton Multifamily	—			672			—			1,286
Solis Apartments at Interlock		—			3,068		(b)	—			4,005		(b)
Total mezzanine	Total mezzanine	3,239			6,639			6,697			10,650			Total mezzanine	3,225			3,239			6,761			6,697
Other interest income	Other interest income	113			107			223			212			Other interest income	189			113			372			223
Total interest income	Total interest income	$	3,352		$	6,746		$	6,920		$	10,862		Total interest income	$	3,414		$	3,352		$	7,133		$	6,920

(a) Includes recognition of interest income related to fee amortization.

(b) Includes ~~prepayment premium~~recognition of ~~$2.4 million from early payoff of the loan.~~unused commitment fees.

~~City Park 2~~Solis Gainesville II

On March ~~23, 2022,~~29, 2023, the Solis Gainesville II preferred equity investment agreement was modified to adjust the interest rate. The interest rate of 14% remains effective through the first 24 months of the investment. Beginning on October 3, 2024, the investment will bear interest at a rate of 10% for 12 months. On October 3, 2025, the investment will again bear interest at

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a rate of 14% per annum through maturity. Additionally, the amendment introduced an unused commitment fee of 10% on the unfunded portion of the investment's maximum loan commitment, which is effective January 1, 2023. Both the interest and unused commitment fee compound annually.

The Interlock

On May 19, 2023, the Company acquired The Interlock. The consideration for such acquisition included the redemption of the Company's outstanding $90.2 million mezzanine loan on the project. Refer to Note5for further information regarding the acquisition.

Solis Kennesaw

On May 25, 2023, the Company entered into a ~~$20.6~~$37.9 million preferred equity investment for the development of a multifamily property located in ~~Charlotte, North Carolina.~~Marietta, Georgia ("Solis Kennesaw"). The investment has economic terms consistent with a note receivable, including a mandatory redemption or maturity on ~~April 28, 2026,~~May 25, 2027, and it is accounted for as a note receivable. The Company's investment bears interest at a rate of ~~13%, compounded~~14.0% for the first 24 months. Beginning on May 25, 2025, the investment will bear interest at a rate of 9.0% for 12 months. On May 25, 2026, the investment will again bear interest at a rate of 14.0% through maturity. The interest compounds annually. The Company also earns an unused commitment fee of 11.0% on the unfunded portion of the investment's maximum loan commitment, which does not compound, and an equity fee on its commitment of $0.6 million to be amortized through redemption. The preferred equity investment is subject to a minimum interest guarantee of $13.1 million over the life of the investment.

Management has concluded that this entity is a VIE. Because the other investor in the project, TP ~~City Park 2~~Kennesaw D LLC, is the developer and managing member of ~~City Park 2 Multifamily,~~Solis Kennesaw, 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 does not consolidate the project in its consolidated financial statements.

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~~Interlock Commercial~~

During February 2022, the Company received $13.5 million as a partial repayment of the Interlock Commercial mezzanine loan, which consisted of $11.1 million of principal and $2.4 million of interest.

Allowance for Loan Losses

The Company is exposed to credit losses primarily through its ~~mezzanine lending activities and preferred equity~~real estate financing investments. As of June 30, ~~2022,~~2023, the Company had ~~3 mezzanine loans (including the Nexton Multifamily and City Park 2 preferred equity~~three real estate financing investments, ~~that are accounted for as notes receivable),~~ each of which are financing 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's management performs a quarterly analysis of the loan portfolio to determine the risk of credit loss based on

the progress of development activities, including leasing activities, projected development costs, and current and projected ~~mezzanine~~

subordinated and senior ~~construction~~ loan balances. The Company estimates future losses on its notes receivable using risk

ratings that correspond to probabilities of default and loss given default. 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 unless remediation actions are taken. Remediation actions may include obtaining additional collateral or assisting the borrower with asset management activities to prepare the project for sale. The Company will also consider placing the loan on ~~nonaccrual~~non-accrual status if it does not believe that additional interest accruals will ultimately be collected.

~~On a quarterly basis, the Company compares the risk inherent in its loans to industry loan loss data experienced during past business cycles.~~ The Company updated the risk ratings for each of its notes receivable as of June 30, ~~2022~~2023 and obtained industry loan loss data relative to these risk ratings. Each of the outstanding loans as of June 30, ~~2022~~2023 was "Pass" rated.

At December 31, 2021, the Company reported $126.4 million of notes receivable, net of allowances of $1.0 million. At June 30, 2022, the Company reported $139.4 million of notes receivable, net of allowances of $1.5 million. Changes The Company's analysis resulted in ~~the~~an allowance for ~~the three and six months ended June 30, 2022 and 2021 were as follows (in thousands):~~

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Beginning balance $ 1,599 $ 1,741 $ 994 $ 2,584
Unrealized credit loss provision (release) 295 388 900 333
Extinguishment due to acquisition — — — (788)
Ending balance (a)
$ 1,894 $ 2,129 $ 1,894 $ 2,129

~~(a) The amount~~loan losses of approximately $1.8 million as of June 30, ~~2022 includes $0.5 million of~~2023. An allowance related to ~~the~~ unfunded commitments ~~which~~of approximately $0.6 million as of June 30, 2023 was recorded as Other liabilities on the consolidated balance sheet.

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At June 30, 2023, the Company reported $60.1 million of notes receivable, net of allowances of $1.2 million. At December 31, 2022, the Company reported $136.0 million of notes receivable, net of allowances of $1.3 million. Changes in the allowance for the six months ended June 30, 2023 and 2022 were as follows (in thousands):


	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
	Funded		Unfunded		Total		Funded		Unfunded		Total
Beginning balance	$	1,292	$	338	$	1,630	$	994	$	10	$	1,004

Unrealized credit loss provision (release)	412		231		643		458		442		900
Release due to redemption	(465)		—		(465)		—		—		—

Ending balance	$	1,239	$	569	$	1,808	$	1,452	$	452	$	1,904

The Company places loans on non-accrual status when the loan balance, together with the balance of any senior loan, approximately equals the estimated realizable value of the underlying development project. As of ~~June 30,~~December 31, 2022, the Company had the ~~Exelon~~Constellation Energy Building note, which ~~bears~~bore interest at 3% per annum, on non-accrual status. The principal balance of the note receivable iswas adequately secured by the seller's partnership interest. On January 14, 2023, the Company acquired an additional 11% membership interest in the Constellation Energy Building, increasing its ownership interest to 90%, in exchange for full satisfaction of the note. As of June 30, ~~2022 and December 31, 2021,~~2023, there were no ~~other~~ loans on non-accrual status.

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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 June 30, ~~2022~~2023 during the next ~~twelve~~12 to 24 months.

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

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 six months ended June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):


		Six Months Ended June 30, 2022				Six Months Ended June 30, 2021					Six Months Ended June 30, 2023				Six Months Ended June 30, 2022
		Construction contract costs and estimated earnings in excess of billings		Billings in excess of construction contract costs and estimated earnings		Construction contract costs and estimated earnings in excess of billings		Billings in excess of construction contract costs and estimated earnings			Construction contract costs and estimated earnings in excess of billings		Billings in excess of construction contract costs and estimated earnings		Construction contract costs and estimated earnings in excess of billings		Billings in excess of construction contract costs and estimated earnings
Beginning balance	Beginning balance	$	243	$	4,881	$	138	$	6,088	Beginning balance	$	342	$	17,515	$	243	$	4,881
Revenue recognized that was included in the balance at the beginning of the period	Revenue recognized that was included in the balance at the beginning of the period	—		(4,881)		—		(6,088)		Revenue recognized that was included in the balance at the beginning of the period	—		(17,515)		—		(4,881)
Increases due to new billings, excluding amounts recognized as revenue during the period	Increases due to new billings, excluding amounts recognized as revenue during the period	—		15,442		—		4,191		Increases due to new billings, excluding amounts recognized as revenue during the period	—		19,282		—		15,442
Transferred to receivables	Transferred to receivables	(361)		—		(464)		—		Transferred to receivables	(343)		—		(361)		—
Construction contract costs and estimated earnings not billed during the period	Construction contract costs and estimated earnings not billed during the period	493		—		85		—		Construction contract costs and estimated earnings not billed during the period	406		—		493		—
Changes due to cumulative catch-up adjustment arising from changes in the estimate of the stage of completion	Changes due to cumulative catch-up adjustment arising from changes in the estimate of the stage of completion	118		(367)		326		(54)		Changes due to cumulative catch-up adjustment arising from changes in the estimate of the stage of completion	1		(971)		118		(367)
Ending balance	Ending balance	$	493	$	15,075	$	85	$	4,137	Ending balance	$	406	$	18,311	$	493	$	15,075

The Company defers pre-contract costs when such costs are directly associated with specific anticipated contracts and their recovery is probable. Pre-contract costs of ~~$1.0~~$1.7 million and ~~$2.2~~$1.3 million were deferred as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Amortization of pre-contract costs for the six months ended June 30, 2023 and 2022 was $0.3 million and ~~2021 was~~ $0.5 million, ~~and $0.2 million,~~ respectively.

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Construction receivables and payables include retentions, which are amounts that are generally withheld until the completion of the contract or the satisfaction of certain restrictive conditions such as fulfillment guarantees. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, construction receivables included retentions of ~~$9.4~~$32.1 million and ~~$3.1~~$8.3 million, respectively. The Company expects to collect substantially all construction receivables outstanding as of June 30, ~~2022~~2023 during the next ~~twelve~~12 to 24 months. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, construction payables included retentions of ~~$10.3~~$36.5 million and ~~$4.2~~$24.7 million, respectively. The Company expects to pay substantially all construction payables outstanding as of June 30, ~~2022~~2023 during the next ~~twelve~~12 to 24 months.

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The Company’s net position on uncompleted construction contracts comprised the following as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Costs incurred on uncompleted construction contracts	Costs incurred on uncompleted construction contracts	$	411,547	$	379,993	Costs incurred on uncompleted construction contracts	$	499,099	$	571,465
Estimated earnings	Estimated earnings	16,423		15,115		Estimated earnings	18,238		22,162
Billings	Billings	(442,552)		(399,746)		Billings	(535,242)		(610,800)
Net position	Net position	$	(14,582)	$	(4,638)	Net position	$	(17,905)	$	(17,173)

Construction contract costs and estimated earnings in excess of billings	Construction contract costs and estimated earnings in excess of billings	$	493	$	243	Construction contract costs and estimated earnings in excess of billings	$	406	$	342
Billings in excess of construction contract costs and estimated earnings	Billings in excess of construction contract costs and estimated earnings	(15,075)		(4,881)		Billings in excess of construction contract costs and estimated earnings	(18,311)		(17,515)
Net position	Net position	$	(14,582)	$	(4,638)	Net position	$	(17,905)	$	(17,173)

The above table reflects the net effect of projects closed as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The Company’s balances and changes in construction contract price allocated to unsatisfied performance obligations (backlog) as of June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Beginning backlog	Beginning backlog	$	419,439	$	38,838	$	215,518	$	71,258	Beginning backlog	$	651,840	$	419,439	$	665,564	$	215,518
New contracts/change orders	New contracts/change orders	167,143		50,278		395,746		53,402		New contracts/change orders	43,975		167,143		114,767		395,746
Work performed	Work performed	(45,368)		(18,897)		(70,050)		(54,441)		Work performed	(103,029)		(45,368)		(187,545)		(70,050)
Ending backlog	Ending backlog	$	541,214	$	70,219	$	541,214	$	70,219	Ending backlog	$	592,786	$	541,214	$	592,786	$	541,214

The Company expects to complete a majority of the uncompleted contracts in place as of June 30, ~~2022~~2023 during the next 12 to 24 months.

8. Indebtedness

Credit Facility

~~The~~On August 23, 2022, the Company ~~has a senior credit facility that was~~and the Operating Partnership entered into an amended and restated ~~on October 3, 2019,~~credit agreement (the "Credit Agreement"), which provides for a ~~$355.0~~$550.0 million credit facility comprised of a ~~$150.0~~$250.0 million senior unsecured revolving credit facility (the "revolving credit facility") and a ~~$205.0~~$300.0 million senior unsecured term loan facility (the "term loan facility" and, together with the revolving credit facility, the "credit facility"), with a syndicate of banks.

The credit facility includes an accordion feature that allows the total commitments to be ~~further~~ increased to ~~$700.0 million,~~$1.0 billion, subject to certain conditions, including obtaining commitments from any one or more lenders. The revolving credit facility has a scheduled maturity date of January ~~24, 2024,~~22, 2027, with 2two six-month extension options, subject to the Company's satisfaction of certain conditions, including payment of a 0.075% extension fee at each extension. The term loan facility has a scheduled maturity date of January ~~24, 2025.~~21, 2028.

The revolving credit facility bears interest at ~~the London Inter-Bank Offered~~Secured Overnight Financing Rate ("~~LIBOR"~~SOFR") plus a margin ranging from 1.30% to 1.85% and a credit spread adjustment of 0.10%, and the term loan facility bears interest at ~~LIBOR~~SOFR plus a margin ranging from 1.25% to 1.80% and a credit spread adjustment of 0.10%, in each case depending on the Company's total leverage. The Company is also obligated to pay an unused commitment fee of ~~0.15%~~15 or ~~0.25%~~25 basis points on the unused portions

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of the commitments under the revolving credit facility, depending on the amount of borrowings under the revolving credit facility. If the Company or the Operating Partnership attains investment grade credit ratings from both S&P Global Ratings and Moody's Investors Service, Inc., the Operating Partnership may elect to have borrowings become subject to interest rates based on such credit ratings.

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the outstanding balance on the revolving credit facility was ~~$82.0~~$154.0 million and ~~$5.0~~$61.0 million, respectively. The outstanding balance on the term loan facility was ~~$205.0~~$300.0 million as of both ~~dates.~~June 30, 2023 and December 31, 2022. As of June 30, ~~2022,~~2023, the effective interest rates on the revolving credit facility and the term loan facility, before giving effect to interest rate caps and swaps, were 6.64% and 6.54%, respectively. After giving effect to interest rate caps and swaps, the effective interest rates on the revolving credit facility and the term loan facility were ~~3.29%~~4.59% and ~~3.24%~~2.45%, ~~respectively.~~respectively, as of June 30, 2023. The ~~Company~~Operating Partnership 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, and its obligations under the credit facility are guaranteed by the Company and

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certain of its subsidiaries that are not otherwise prohibited from providing such guaranty. The ~~credit agreement~~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~~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.

M&T Term Loan Facility

On December 6, 2022, the Company, as parent guarantor, and the Operating Partnership, as borrower, entered into a term loan agreement (the "M&T term loan agreement") with Manufacturers and Traders Trust Company, as lender and administrative agent, which provides a $100.0 million senior unsecured term loan facility (the "M&T term loan facility"), with the option to increase the total capacity to $200.0 million, subject to the Company's satisfaction of certain conditions. The proceeds from the M&T term loan facility were used to repay the loans secured by the Wills Wharf, 249 Central Park Retail, Fountain Plaza Retail, and South Retail properties. The M&T term loan facility has a scheduled maturity date of March 8, 2027, with a one-year extension option, subject to the Company's satisfaction of certain conditions, including payment of a 0.075% extension fee.

The M&T term loan facility bears interest at a rate elected by the Operating Partnership based on term SOFR, Daily Simple SOFR, or the Base Rate (as defined below), and in each case plus a margin. A term SOFR or Daily Simple SOFR loan is also subject to a credit spread adjustment of 0.10%. The margin under each interest rate election depends on the Company's total leverage. The "Base Rate" is equal to the highest of: (a) the rate of interest in effect for such day as publicly announced from time to time by M&T Bank as its “prime rate” for such day, (b) the Federal Funds Rate for such day, plus 0.50%, (c) one month term SOFR for such day plus 100 basis points and (d) 1.00%. The Operating Partnership has elected for the loan to bear interest at term SOFR plus margin. If the Company or the Operating Partnership attains investment grade credit ratings from both S&P Global Ratings and Moody's Investor Service, Inc., the Operating Partnership may elect to have borrowings become subject to interest rates based on such credit ratings.

As of June 30, 2023 and December 31, 2022, the outstanding balance on the M&T term loan facility was $100.0 million. As of June 30, 2023, the effective interest rate on the M&T term loan facility, before giving effect to interest rate swaps, was 6.54%. After giving effect to interest rate swaps, the effective interest rate on the M&T term loan facility was 4.90% as of June 30, 2023. The Operating Partnership may, at any time, voluntarily prepay the M&T term loan facility in whole or in part without premium or penalty, provided certain conditions are met.

The Operating Partnership is the borrower under the M&T term loan facility, and its obligations under the M&T term loan facility are guaranteed by the Company and certain of its subsidiaries that are not otherwise prohibited from providing such guaranty. The M&T term loan agreement contains customary representations and warranties and financial and other affirmative and negative covenants. The Company's ability to borrow under the M&T term loan facility is subject to ongoing compliance with a number of financial covenants, affirmative covenants, and other restrictions. The term loan 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 M&T term loan facility to be

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immediately due and payable.

TD Term Loan Facility

On May 19, 2023, the Company, as parent guarantor, and the Operating Partnership, as borrower, entered into a term loan agreement (the "TD term loan agreement") with Toronto Dominion (Texas) LLC, as administrative agent, and TD Bank, N.A. as lender, which provides a $75.0 million senior unsecured term loan facility (the "TD term loan facility"), with the option to increase the total capacity to $150.0 million, subject to the Company's satisfaction of certain conditions. The proceeds from the TD term loan facility were used in connection with the acquisition of The Interlock, which is detailed in Note 5. The TD term loan facility has a scheduled maturity date of May 19, 2025, with a one-year extension option, subject to the Company's satisfaction of certain conditions, including payment of a 0.15% extension fee.

The TD term loan facility bears interest at a rate elected by the Operating Partnership based on term SOFR, Daily Simple SOFR, or the Base Rate (as defined below), and in each case plus a margin. A term SOFR or Daily Simple SOFR loan is also subject to a credit spread adjustment of 0.10%. The margin under each interest rate election depends on the Company's total leverage. The "Base Rate" is equal to the highest of: (a) the Federal Funds Rate for such day, plus 0.50% (b) the rate of interest in effect for such day as publicly announced from time to time by the administrative agent as its “prime rate” for such day, (c) one month term SOFR for such day plus 100 basis points and (d) 1.00%. The Operating Partnership has elected for the loan to bear interest at term SOFR plus margin. If the Company or the Operating Partnership attains investment grade credit ratings from both S&P Global Ratings and Moody's Investor Service, Inc., the Operating Partnership may elect to have borrowings become subject to interest rates based on such credit ratings.

On June 29, 2023, the TD term loan facility commitment increased to $95.0 million as a result of the addition of a second lender to the facility.

As of June 30, 2023, the outstanding balance on the TD term loan facility was $95.0 million. As of June 30, 2023, the effective interest rate on the TD term loan facility, before giving effect to interest rate swaps, was 6.64%. After giving effect to interest rate swaps, the effective interest rate on the TD term loan facility was 4.70% as of June 30, 2023. The Operating Partnership may, at any time, voluntarily prepay the TD term loan facility in whole or in part without premium or penalty, provided certain conditions are met.

The Operating Partnership is the borrower under the TD term loan facility, and its obligations under the TD term loan facility are guaranteed by the Company and certain of its subsidiaries that are not otherwise prohibited from providing such guaranty. The TD term loan agreement contains customary representations and warranties and financial and other affirmative and negative covenants. The Company's ability to borrow under the TD term loan facility is subject to ongoing compliance with a number of financial covenants, affirmative covenants, and other restrictions. The TD term loan 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 TD term loan facility to be immediately due and payable.

The Company is currently in compliance with all covenants ~~governing~~under the ~~credit facility.~~Credit Agreement, the M&T term loan agreement, and TD term loan agreement, all of which are substantially similar.

Other ~~2022~~2023 Financing Activity

~~On January 5, 2022,~~Effective April 3, 2023, the Company ~~contributed $2.6~~transitioned the $69.0 million loan secured by Thames Street Wharf to SOFR, previously indexed to the Harbor Point Parcel 3 joint venture in order to meet the lender's equity funding requirement since a $15.0 million standby letter of credit, which was available for draw down on the revolving credit facility in the event the Company did not meet its equity requirement, expired on January 4, 2022.

~~On January 14, 2022, the Company acquired a 79% membership interest and an additional 11% economic interest in the partnership that owns the mixed-use property known as the Exelon Building.~~Bloomberg Short-Term Yield Index (BSBY). The ~~property was subject to a $156.1 million loan, which the Company immediately refinanced following the acquisition with a new $175.0 million loan. The new~~modified loan bears interest at a rate of ~~BSBY~~SOFR plus a spread of ~~1.50%~~1.30% and ~~will mature on November 1, 2026.~~a credit spread adjustment of 0.10%.

~~On January 19, 2022,~~Effective April 3, 2023, the Company ~~paid off~~transitioned the ~~$14.1~~$175.0 million ~~balance of the~~ loan secured by the ~~Delray Beach Plaza shopping center.~~

~~On March 3, 2022, the Company paid off the $10.3 million balance of the loan secured by the Red Mill West Commons shopping center.~~

~~On April 25, 2022, Harbor Point Parcel 3, a joint venture~~Constellation Energy Building to ~~which the Company is party, entered into a construction loan agreement for $161.5 million.~~

~~On April 25, 2022, Harbor Point Parcel 4, a real estate venture~~SOFR, previously indexed to ~~which the Company is party, entered into a construction loan agreement for $109.7 million.~~

~~On June 29, 2022, the Company paid off the $1.9 million loan balance associated with North Pointe Phase II in conjunction with the sale of the property leased and occupied by Costco.~~

~~On June 30, 2022, the Company refinanced the $20.1 million loan secured by Nexton Square.~~BSBY. The ~~new $22.5 million~~modified loan bears interest at a rate of ~~Secured Overnight Financing Rate ("SOFR")~~SOFR plus a spread of ~~1.95% (SOFR has~~1.50% and a ~~0.30% floor) and will mature on June 30, 2027.~~credit spread adjustment of 0.11%.

During the six months ended June 30, ~~2022,~~2023, the Company borrowed ~~$26.9~~$13.8 million under its existing construction loans to fund new development and construction.

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9. Derivative Financial Instruments

The Company enters into interest rate derivative contracts to manage exposure to interest rate risks. The Company does not use derivative financial instruments for trading or speculative purposes. Derivative financial instruments are recognized at fair value and presented within other assets and other liabilities in the condensed 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 in the condensed consolidated statements of comprehensive income. For derivatives that qualify as cash flow hedges, 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.

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As of June 30, ~~2022,~~2023, the Company had the following ~~LIBOR,~~ SOFR ~~and BSBY~~ interest rate caps ($ in thousands):

Effective Date Maturity Date Notional Amount Strike Rate Premium Paid
7/1/2020 7/1/2023 $ 100,000 (a) 0.50% (LIBOR) $ 232
11/1/2020 11/1/2023 84,375 (a) 1.84% (SOFR) 91
2/2/2021 2/1/2023 100,000 0.50% (LIBOR) 45
3/4/2021 4/1/2023 14,479 2.50% (LIBOR) 4
5/5/2021 5/1/2023 50,000 0.50% (LIBOR) 75
5/5/2021 5/1/2023 35,100 0.50% (LIBOR) 55
6/16/2021 7/1/2023 100,000 0.50% (LIBOR) 120
1/11/2022 2/1/2024 175,000 4.00% (BSBY) 154
4/7/2022 2/1/2024 175,000 (a) 1.00%-3.00% (BSBY) (b) 3,595
9/1/2022 9/1/2024 73,562 (a) 1.00%-3.00% (SOFR) (b)(c) 1,370
Total $ 907,516 $ 5,741


Effective Date	Maturity Date	Notional Amount			Strike Rate			Premium Paid
11/1/2020	11/1/2023	$	84,375	(a)	1.84	%		$	91
7/1/2022	1/1/2024	50,000		(a)(b)	1.00%-3.00%		(c)	143		(d)
7/5/2022	1/1/2024	35,100		(a)	1.00%-3.00%		(c)	120		(d)
7/6/2022	3/1/2024	200,000		(a)(b)	1.00%-3.00%		(c)	352		(d)
9/1/2022	9/1/2024	46,490		(a)(e)	1.00%-3.00%		(c)	1,370
Total		$	415,965					$	2,076

(a) Designated as a cash flow hedge.

(b) Subsequent to June 30, 2023, these interest rate caps were terminated and replaced with floating-to-fixed interest rate swaps. Refer to Note 15 for further information.

(c) The Company purchased interest rate caps at 1.00% and sold interest rate caps at 3.00%, resulting in interest rate cap corridors of 1.00% and 3.00%. The intended goal of these corridors is to provide a level of protection from the effect of rising interest rates and reduce the all-in cost of the derivative instrument.

~~(c) The Company purchased this interest rate cap corridor during the three months ended June 30, 2022 with an effective date of September 1, 2022. The notional~~(d) This amount represents the ~~maximum~~sum of the premiums paid on the original instruments. The caps were blended and extended for a net zero premium during the year ended December 31, 2022.

(e) Represents the notional amount ~~that will eventually be in effect.~~as of June 30, 2023. The notional amount is scheduled to increase over the term of the corridor in accordance with projected borrowings on the associated loan. The maximum notional amount that will eventually be in effect is $73.6 million.

As of June 30, ~~2022,~~2023, the Company held the following floating-to-fixed interest rate swaps ($ in thousands):


Related Debt	Related Debt	Notional Amount			Index	Swap Fixed Rate		Debt effective rate		Effective Date	Expiration Date	Related Debt	Notional Amount			Index		Swap Fixed Rate		Debt effective rate		Effective Date	Expiration Date
Senior unsecured term loan	Senior unsecured term loan	$	50,000	(a)	1-month LIBOR	2.26	%	3.71	%	4/1/2019	10/26/2022	Senior unsecured term loan	$	32,569	(a)	1-month SOFR	(b)	2.17	%	3.57	%	4/1/2019	8/10/2023
Senior unsecured term loan	Senior unsecured term loan	50,000			1-month LIBOR	2.78	%	4.23	%	5/1/2018	5/1/2023	Senior unsecured term loan	10,500		(a)	1-month SOFR	(b)	2.94	%	4.34	%	10/12/2018	10/12/2023
249 Central Park Retail, South Retail, and Fountain Plaza Retail		33,115		(a)	1-month LIBOR	2.25	%	3.85	%	4/1/2019	8/10/2023
Constellation Energy Building												Constellation Energy Building	175,000		(a)(c)	1-month SOFR		1.84	%	3.46	%	4/1/2023	2/1/2024
Senior unsecured term loan	Senior unsecured term loan	10,500		(a)	1-month LIBOR	3.02	%	4.47	%	10/12/2018	10/12/2023	Senior unsecured term loan	25,000		(a)	1-month SOFR	(b)	0.42	%	1.82	%	4/1/2020	4/1/2024
Senior unsecured term loan	Senior unsecured term loan	25,000		(a)	1-month LIBOR	0.50	%	1.95	%	4/1/2020	4/1/2024	Senior unsecured term loan	25,000		(a)	1-month SOFR	(b)	0.33	%	1.73	%	4/1/2020	4/1/2024
Senior unsecured term loan	Senior unsecured term loan	25,000		(a)	1-month LIBOR	0.50	%	1.95	%	4/1/2020	4/1/2024	Senior unsecured term loan	25,000		(a)	Daily SOFR	(b)	0.44	%	1.84	%	4/1/2020	4/1/2024
Revolving credit facility and TD unsecured term loan												Revolving credit facility and TD unsecured term loan	100,000			Daily SOFR		3.20	%	4.70	%	5/19/2023	5/19/2026	(d)
Thames Street Wharf												Thames Street Wharf	68,611		(a)	Daily SOFR	(b)	0.93	%	2.33	%	9/30/2021	9/30/2026
M&T unsecured term loan												M&T unsecured term loan	100,000		(a)	1-month SOFR		3.50	%	4.90	%	12/6/2022	12/6/2027
Senior unsecured term loan	Senior unsecured term loan	25,000		(a)	1-month LIBOR	0.55	%	2.00	%	4/1/2020	4/1/2024	Senior unsecured term loan	100,000			1-month SOFR		3.43	%	4.83	%	12/13/2022	1/21/2028
Thames Street Wharf		70,044		(a)	1-month BSBY	1.05	%	2.35	%	9/30/2021	9/30/2026
Total	Total	$	288,659									Total	$	661,680

(a) Designated as a cash flow hedge.

(b) Transitioned to SOFR during the six months ended June 30, 2023.

(c) Effective April 4, 2023, the Company terminated its 4.00% BSBY interest rate cap with a notional amount of $175.0 million and its BSBY corridor of 1.00%-3.00% with a notional amount of $175.0 million and, effective April 3, 2023, entered into this interest rate swap agreement. The Company paid a net zero premium for this transaction.

(d) Subject to cancellation by the counterparty beginning on May 1, 2025 and the first day of each month thereafter.

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For the interest rate swaps and caps designated as cash flow hedges, realized gains and losses are reclassified out of accumulated other comprehensive ~~loss~~gain (loss) to interest expense in the condensed consolidated statements of comprehensive income due to payments ~~made~~received from and paid to the ~~swap~~ counterparty. During the next 12 months, the Company anticipates recognizing approximately ~~$7.3~~$13.7 million of net hedging gains as reductions to interest expense. These amounts will be reclassified from accumulated other comprehensive gain into earnings to offset the variability of the hedged items during this period.

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The Company’s derivatives were comprised of the following as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):


		June 30, 2022						December 31, 2021							June 30, 2023						December 31, 2022
		Notional Amount		Fair Value				Notional Amount		Fair Value					Notional Amount		Fair Value				Notional Amount		Fair Value
				Asset		Liability				Asset		Liability					Asset		Liability				Asset		Liability
Derivatives not designated as accounting hedges	Derivatives not designated as accounting hedges													Derivatives not designated as accounting hedges
Interest rate swaps	Interest rate swaps	$	50,000	$	90	$	—	$	50,000	$	—	$	(1,454)	Interest rate swaps	$	200,000	$	4,125	$	—	$	250,000	$	2,201	$	—
Interest rate caps	Interest rate caps	474,579		6,519		—		399,579		1,019		—		Interest rate caps	—		—		—		289,479		2,102		—
Total derivatives not designated as accounting hedges	Total derivatives not designated as accounting hedges	524,579		6,609		—		449,579		1,019		(1,454)		Total derivatives not designated as accounting hedges	200,000		4,125		—		539,479		4,303		—
Derivatives designated as accounting hedges	Derivatives designated as accounting hedges													Derivatives designated as accounting hedges
Interest rate swaps	Interest rate swaps	238,659		8,453		—		239,633		1,317		(2,013)		Interest rate swaps	461,680		14,879		—		187,670		11,247		—
Interest rate caps	Interest rate caps	360,472		9,208		—		384,375		590		—		Interest rate caps	415,965		5,918		—		561,200		13,565		—
Total derivatives	Total derivatives	$	1,123,710	$	24,270	$	—	$	1,073,587	$	2,926	$	(3,467)	Total derivatives	$	1,077,645	$	24,922	$	—	$	1,288,349	$	29,115	$	—

The changes in the fair value of the Company’s derivatives during the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were comprised of the following (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Interest rate swaps	Interest rate swaps	$	2,807	$	(86)	$	9,564	$	2,375	Interest rate swaps	$	10,738	$	2,807	$	7,236	$	9,564
Interest rate caps	Interest rate caps	3,817		(35)		8,999		207		Interest rate caps	362		3,817		(366)		8,999
Total change in fair value of interest rate derivatives	Total change in fair value of interest rate derivatives	$	6,624	$	(121)	$	18,563	$	2,582	Total change in fair value of interest rate derivatives	$	11,100	$	6,624	$	6,870	$	18,563
Comprehensive income statement presentation:	Comprehensive income statement presentation:									Comprehensive income statement presentation:
Change in fair value of derivatives and other	Change in fair value of derivatives and other	$	2,674	$	348	$	6,891	$	775	Change in fair value of derivatives and other	$	4,294	$	2,674	$	490	$	6,891
Unrealized cash flow hedge gains (losses)	Unrealized cash flow hedge gains (losses)	3,950		(469)		11,672		1,807		Unrealized cash flow hedge gains (losses)	6,806		3,950		6,380		11,672
Total change in fair value of interest rate derivatives	Total change in fair value of interest rate derivatives	$	6,624	$	(121)	$	18,563	$	2,582	Total change in fair value of interest rate derivatives	$	11,100	$	6,624	$	6,870	$	18,563

10. Equity

Stockholders’ Equity

On March 10, 2020, the Company commenced an 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 $300.0 million, to or through its sales agents and, with respect to shares of its common stock, may enter into separate forward sales agreements to or through the forward purchaser.

During the six months ended June 30, 2022, the Company issued and sold 475,074 shares of common stock at a weighted average price of $15.21 per share under the ATM Program, receiving net proceeds, after offering costs and commissions, of $7.1 million. During the six months ended June 30, 2022,2023, the Company did not issue any shares of common stock or Series A Preferred Stock under the ATM Program. Shares having an aggregate offering price of $205.0 million remained unsold under the ATM Program as of August 4, ~~2022.~~

On January 11, 2022, the Company completed an underwritten public offering of 4,025,000 shares of common stock, which were pre-purchased from the Company by the underwriter at a purchase price of $14.45 per share of common stock including fees, resulting in net proceeds after offering costs of $58.0 million.2023.

Noncontrolling Interests

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company held a 75.8% and 76.7% ~~and 75.3% common~~economic interest in the Operating

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Partnership, respectively. As of June 30, ~~2022,~~2023, the Company 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

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Operating Partnership as it has the power to direct the activities of the Operating Partnership and the rights to absorb ~~76.7%~~75.8% 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 Operating Partnership represent units of limited partnership interest in the Operating Partnership not held by the Company. As of June 30, ~~2022,~~2023, there were ~~20,621,336~~21,613,208 Class A ~~units of limited partnership interest~~Units and 39,694 LTIP Units in the Operating Partnership ("~~Class A~~LTIP Units") not held by the Company. The Company's financial position and results of operations are the same as those of the Operating Partnership.

Additionally, the Operating Partnership owns a majority interest in certain non-wholly-owned operating and development properties. The noncontrolling interest for ~~investment~~consolidated real estate entities was $10.7 million and $24.1 million as of ~~$24.0 million relates to~~June 30, 2023 and December 31, 2022, respectively, which represents the minority partners' interest in certain joint venture entities as of June 30, 2022, including $23.3 million for minority partners’ interest in the Exelon Building. The noncontrolling interest for consolidated real estate entities was $0.6 million as of December 31, 2021.entities.

On ~~January 1, 2022, due to holders~~April 3, 2023, in connection with the tender by a holder of Class A Units ~~tendering an aggregate~~ of ~~12,149~~51,000 Class A Units for redemption by the Operating Partnership, the Company elected to satisfy the redemption ~~requests~~request with a cash payment of $0.6 million.

Share Repurchase Program

On June 15, 2023, the Company adopted a $50.0 million share repurchase program (the "Share Repurchase Program"). Under the Share Repurchase Program, the Company may repurchase shares of common stock and Series A Preferred Stock from time to time in the open market, in block purchases, through privately negotiated transactions, the ~~issuance~~use of ~~an equal~~trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, or other means permitted. The Share Repurchase Program does not obligate the Company to acquire any specific number of shares or acquire shares over any specific period of time. The Share Repurchase Program may be suspended or discontinued at any time by the Company and does not have an expiration date. During the six months ended June 30, 2023, the Company did not repurchase any shares of common ~~stock.~~stock or Series A Preferred Stock. As of June 30, 2023, $50.0 million remained available for repurchases under the Share Repurchase Program.

Dividends and Distributions

During the six months ended June 30, ~~2022,~~2023, the following dividends/distributions were declared or paid:

Equity type

Declaration Date

Record Date

Payment Date

Dividends per Share/Unit

Aggregate Dividends/Distributions on Stock and Units (in thousands)

Equity type

Declaration Date

Record Date

Payment Date

Dividends per Share/Unit

Aggregate Dividends/Distributions on Stock and Units (in thousands)

Common Stock/Class A Units

10/25/2021

12/29/2021

01/06/2022

0.17

14,209

Common Stock/Class A Units

11/04/2022

12/28/2023

01/05/2023

0.190

16,785

Common Stock/Class A Units

02/23/2022

03/30/2022

04/07/2022

0.17

15,014

Common Stock/Class A Units

02/28/2023

03/29/2023

04/06/2023

0.190

16,825

Common Stock/Class A Units

05/12/2022

06/29/2022

07/07/2022

0.17

15,020

Common Stock/Class A Units

05/08/2023

06/28/2023

07/06/2023

0.195

17,471

Series A Preferred Stock

10/25/2021

01/03/2022

01/14/2022

0.421875

2,887

Series A Preferred Stock

11/04/2022

01/03/2023

01/13/2023

0.421875

2,887

Series A Preferred Stock

02/23/2022

04/01/2022

04/15/2022

0.421875

2,887

Series A Preferred Stock

02/28/2023

04/03/2023

04/14/2023

0.421875

2,887

Series A Preferred Stock

05/12/2022

07/01/2022

07/15/2022

0.421875

2,887

Series A Preferred Stock

05/08/2023

07/03/2023

07/14/2023

0.421875

2,887

11. Stock-Based Compensation

The Company’s Amended and Restated 2013 Equity Incentive Plan, as amended June 14, 2023 (the "Equity Plan"), permits the grant of restricted stock awards, stock options, stock appreciation rights, performance units, LTIP Units and other equity-based awards up to an aggregate of ~~1,700,000~~3,400,000 shares of common stock. As of June 30, ~~2022,~~2023, there were ~~398,307~~1,570,274 shares available for issuance under the Equity Plan.

During the six months ended June 30, ~~2022,~~2023, the Company granted an aggregate of ~~286,086~~428,157 shares of restricted stock and LTIP Units to employees and non-employee directors with a weighted average grant date fair value of ~~$14.62~~$12.47 per ~~share.~~share or LTIP Unit. Of those ~~shares, 52,088~~shares,87,905 were surrendered by the employees for income tax ~~withholdings.~~withholdings and 1,587 were forfeited in accordance with service conditions of grants (excluding items noted below). 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. ~~Beginning with grants made in 2021, executive~~Executive officers' restricted shares generally vest over a period of three years: two-fifths immediately on the grant date and the remaining three-fifths in equal amounts on the first three anniversaries following the grant date, subject to continued service to the Company. Non-employee director restricted stock awards or LTIP Units may vest either immediately upon grant or over a period of one year, subject to continued service to the Company. Unvested restricted stock awards and LTIP

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Units are entitled to receive ~~dividends~~distributions from their grant date.

During the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, the Company recognized ~~$0.6~~$0.3 million and ~~$0.5~~$0.6 million, respectively, of stock-based compensation cost. During both the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, the Company recognized $2.4 million ~~and $1.7 million, respectively,~~ of stock-based compensation cost. As of June 30, ~~2022,~~2023, there were ~~221,693 nonvested~~313,693 non-vested restricted shares and LTIP Units outstanding; the total unrecognized compensation expense related to ~~nonvested~~non-vested restricted shares and LTIP Units was ~~$2.3~~$3.1 million , which the Company expects to recognize over the next 33 months.

As a result of the Company inadvertently issuing more shares of common stock than were available for issuance under the Equity Plan, on May 9, 2023, the Company's Chief Executive Officer and the Company's Chief Financial Officer forfeited 75,321 and 8,975 restricted shares of common stock, respectively. Following approval by the Company’s board of directors and stockholders of an amendment to the Equity Plan to increase the number of shares available for issuance thereunder, on June 20, 2023, 75,321 and 8,975 restricted shares of common stock were granted to the Company's Chief Executive Officer and the Company's Chief Financial Officer, respectively, one-third of which will vest on March 3, 2024, one-third of which will vest on March 3, 2025, and one-third of which will vest on March 3, 2026, subject to the executives' continued employment on such dates.

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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 — quoted prices in active markets for identical assets or liabilities

Level 2 — observable inputs other than quoted prices in active markets for identical assets and liabilities

Level 3 — unobservable inputs

Except as disclosed below, the carrying amounts of the Company’s financial instruments approximate their fair values. Financial assets and liabilities whose fair values are measured on a recurring basis using Level 2 inputs consist of interest rate swaps and 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 estimate the 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.

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 as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 were as follows (in thousands):


		June 30, 2022				December 31, 2021					June 30, 2023				December 31, 2022
		Carrying Value		Fair Value		Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
Indebtedness, net (a)	Indebtedness, net (a)	$	1,164,713	$	1,158,485	$	958,910	$	976,520	Indebtedness, net(a)	$	1,264,643	$	1,254,044	$	1,079,233	$	1,058,530
Notes receivable, net	Notes receivable, net	139,383		139,383		126,429		126,429		Notes receivable, net	60,095		60,095		136,039		136,039
Interest rate swap liabilities		—		—		3,467		3,467

Interest rate swap and cap assets	Interest rate swap and cap assets	24,270		24,270		2,926		2,926		Interest rate swap and cap assets	24,922		24,922		29,115		29,115

(a) ~~The values~~Excludes $11.1 million and $11.0 million of deferred financing costs as of June 30, ~~2022~~2023 and December 31, ~~2021~~ ~~include loans reclassified to liabilities related to assets held for sale.~~2022, respectively.

13. Related Party Transactions

The Company provides general contracting services to certain related party entities that are included in these condensed

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consolidated financial statements. Revenue and gross profit from construction contracts with these entities for the three months ended June 30, 2021 were $6.3 million and $0.2 million, respectively. Revenue and gross profit from construction contracts with these entities for the six months ended June 30, 2021 were $18.7 million and $0.7 million, respectively. Revenue and gross profit from construction contracts with these entities for the three and six months ended June 30, 2023 and 2022 were ~~immaterial.~~not material. There were no outstanding construction receivables due from related parties as of June 30, ~~2022 compared to $4.1 million outstanding at~~2023 and December 31, ~~2021.~~

The general contracting services described above include contracts with an aggregate price of $81.6 million with the developer of a mixed-use project, including an apartment building, retail space, and a parking garage located in Virginia Beach, Virginia. The developer is owned in part by certain executives of the Company, not including the Chief Executive Officer and Chief Financial Officer. These contracts were executed in 2019 and were substantially complete as of September 10, 2021. Aggregate gross profit was projected at $3.9 million to the Company, representing a gross profit margin of 5.1% as of June 30, 2022. As part of these contracts and per the requirements of the lender for this project, the Company issued a letter of credit for $9.5 million to secure certain performances of the Company's subsidiary construction company under the contracts, of which $1.9 million remains outstanding as of June 30, 2022.

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The Company provides general contracting services to the Harbor Point Parcel 3 and Harbor Point Parcel 4 ~~partnerships.~~ventures. See Note 5 for more information. During the three and six months ended June 30, 2023, the Company recognized gross profit of $0.4 million and $0.7 million, respectively, relating to these construction contracts. During the three and six months ended June 30, 2022, the Company recognized gross profit of $0.1 million and $0.2 million, respectively, relating to these construction contracts.

The Operating Partnership entered into tax protection agreements that indemnify certain directors and executive officers of the Company from their tax liabilities resulting from the potential future sale of certain of the Company’s properties prior to May 13, 2023.

14. 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 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 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 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 certain of the Company's ~~mezzanine lending~~real estate financing activities and equity method investments, 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 outstanding guarantees made by the Company as of June 30, 2022 (in thousands):~~

Development project Payment guarantee amount Guarantee liability
Interlock Commercial $ 37,450 $ 1,346
Harbor Point Parcel 4 (a)
32,910 242
Total $ 70,360 $ 1,588

~~(a)~~ As of June 30, ~~2022,~~2023, the Company had an outstanding guarantee liability of $0.2 million related to the $32.9 million senior loan on the Harbor Point Parcel 4. As of June 30, 2023, no amounts have been funded on this senior loan.

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 ~~$2.7~~$8.6 million and ~~$2.1~~$8.5 million as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. In addition, as of June 30, ~~2022,~~2023, the Company has an outstanding letter of credit for $1.9 million to secure certain performances of the Company's subsidiary construction company under a related party project.

Unfunded Loan Commitments

The Company has certain commitments related to its notes receivable investments that it may be required to fund in the future. The Company is generally obligated to fund these commitments at the request of the borrower or upon the occurrence of events outside of the Company's direct control. As of June 30, ~~2022,~~2023, the Company had ~~three~~four notes receivable

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with a total of ~~$19.3~~$35.0 million of unfunded commitments. If commitments are funded in the future, interest will be charged at rates consistent with the existing investments. As of June 30, ~~2022,~~2023, the Company has recorded a ~~$0.5~~$0.6 million CECL allowance that relates to the unfunded commitments, which was recorded as a liability in Other liabilities in the consolidated balance sheet. See Note 6 for more information.

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15. Subsequent Events

The Company has evaluated subsequent events through the date on which this Quarterly Report on Form 10-Q was filed, the date on which these financial statements were issued, and identified the items below for discussion.

~~Real Estate~~

~~On July 22, 2022, the Company sold The Residences at Annapolis Junction for a sale price of $150.0 million. This property was classified as held for sale as of June 30, 2022.~~Notes Receivable

On July 26, ~~2022,~~2023, the Company ~~sold~~entered into a $28.4 million preferred equity investment for the ~~AutoZone~~development of a multifamily property located in Peachtree Corners, Georgia (Solis Peachtree Corners). The preferred equity investment has economic and ~~Valvoline outparcels~~other terms consistent with a note receivable, including a mandatory redemption feature. The Company's investment bears interest at ~~Sandbridge Commons~~a rate of 15.0% for the first 27 months. Beginning on November 1, 2025, the investment will bear interest at a ~~sale price~~rate of ~~$3.5 million.~~9.0% for 12 months. On November 1, 2026, the investment will again bear interest at a rate of 15.0% through maturity. The interest compounds annually. The Company also earns an unused commitment fee of 10.0% on the unfunded portion of the investment's maximum loan commitment, which also compounds annually, and an equity fee on its commitment of $0.4 million to be amortized through redemption. The preferred equity investment is subject to a minimum interest guarantee of $12.0 million over the life of the investment.

On July 26, 2023, the Company entered into a $9.2 million preferred equity investment for the development of a multifamily property ~~was classified~~located in Chesapeake, Virginia ("The Allure at Edinburgh"). The preferred equity investment has economic and other terms consistent with a note receivable, including a mandatory redemption feature. The Company's investment bears interest at a rate of 15.0%, which does not compound. Upon The Allure at Edinburgh obtaining a certificate of occupancy, the investment will bear interest at a rate of 10.0%. The common equity partner in the development property holds an option to sell the property to the Company at a predetermined amount if certain conditions are met. The Company also holds an option to purchase the property at any time prior to maturity of the preferred equity investment, and at the same predetermined amount as ~~held for sale as of June 30, 2022.~~the common equity partner's option to sell.

Indebtedness

~~On July 22, 2022, the Company paid off the $84.4 million loan secured by The Residences at Annapolis Junction in conjunction with the disposition mentioned above.~~

In July ~~2022,~~2023, the Company had net ~~paydowns~~borrowings of ~~$31.0~~$37.0 million on the revolving credit facility.

Derivative Financial Instruments

On July ~~1, 2022,~~5, 2023, the Company ~~modified and extended 2 interest rate caps~~terminated the SOFR corridor of 1.00%-3.00% with ~~total~~a notional ~~amounts~~amount of $200.0 million, and ~~LIBOR strike rates~~entered into an interest rate swap agreement with a notional amount of ~~0.50%, which were scheduled to~~$200.0 million and a SOFR rate of 3.39%. The interest rate swap will expire on ~~July 1, 2023. The modified agreements establish a SOFR corridor bought at 1.00% and sold at 3.00% on a $200.0 million notional amount, with the expiration date extended to~~ March 1, ~~2024.~~2024, which reflects the same maturity date as the terminated corridor. The Company ~~did not pay~~paid a net zero premium for this ~~modification.~~transaction.

On July ~~5, 2022,~~6, 2023, the Company ~~modified~~terminated the SOFR corridor of 1.00%-3.00% with a notional amount of $50.0 million, and ~~extended~~entered into an interest rate ~~cap~~swap agreement with a notional amount of $50.0 million and a ~~LIBOR strike~~SOFR rate of ~~0.50%, which was scheduled to~~3.40%. The interest rate swap will expire on ~~May 1, 2023. The modified agreement establishes a SOFR corridor bought at 1.00% and sold at 3.00% on a $50.0 million notional amount, with the expiration date extended to~~ January 1, ~~2024.~~2024, which reflects the same maturity date as the terminated corridor. The Company paid a ~~de minimis~~net zero premium for this ~~modification.~~

On July 5, 2022, the Company modified and extended the interest rate cap associated with the Chronicle Mill project with a notional amount of $35.1 million and a LIBOR strike rate of 0.50%, which was scheduled to expire on May 1, 2023. The modified agreement establishes a SOFR corridor bought at 1.00% and sold at 3.00% on a $35.1 million notional amount, with the expiration date extended to January 1, 2024. The Company paid a de minimis premium for this modification.transaction.

Equity

On July ~~1, 2022,~~14, 2023, due to a holder of Class A Units tendering 10,146 Class A Units for redemption by the Operating Partnership, the Company elected to satisfy the redemption request with a cash payment of $0.1 million.

On July 28, 2022, the Company announced that its board of directors declared a cash dividend of $0.19 per common share for the third quarter of 2022. The third quarter dividend will be payable in cash on October 6, 2022 to stockholders of record on September 28, 2022.

On July 28, 2022, the Company announced that its board of directors declared a cash dividend of $0.421875 per share of Series A Preferred Stock for the third quarter of 2022. The dividend will be payable in cash on October 14, 2022 to stockholders of record on October 3, 2022.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

References to "we," "our," "us," and "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"), of which we are the sole general partner. The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report.

Forward-Looking Statements

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," 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:

•adverse economic or real estate developments, either nationally or in the markets in which our properties are ~~located, including as a result of the COVID-19 pandemic;~~

▪~~our ability to commence or continue construction and development projects on the timeframes and terms currently anticipated;~~located;

•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 ability to commence or continue construction and development projects on the timeframes and terms currently anticipated;

•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~~rates;

•the impact of inflation, including 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;

•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;~~

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•decreased rental rates or increased vacancy rates;

•conflicts of interests with our officers and directors;

•lack or insufficient amounts of insurance;

•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") 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;

•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 changes to U.S. tax laws.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We caution investors not to place undue reliance on these forward-looking statements and urge investors to carefully review the disclosures we make concerning risks and uncertainties in the sections entitled "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our most recent Annual Report on Form 10-K, as well as risks, uncertainties and other factors discussed in this Quarterly Report on Form 10-Q, and other documents that we file from time to time with the Securities and Exchange Commission (the "SEC").

Business Description

We are a vertically-integrated, self-managed REIT with over four decades of experience developing, building, acquiring, and managing high-quality office, retail, and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States. We also provide general construction and development services to third-party clients, in addition to developing and building properties to be placed in our stabilized portfolio. As of June 30, ~~2022,~~2023, our operating property portfolio consisted of the following properties:

Property Segment Location Ownership Interest
4525 Main Street Office Virginia Beach, Virginia* 100 %
Armada Hoffler Tower Office Virginia Beach, Virginia* 100 %
Brooks Crossing Office Office Newport News, Virginia 100 %
Exelon Office Office Baltimore, Maryland** 79 % (1)
One City Center Office Durham, North Carolina 100 %
One Columbus Office Virginia Beach, Virginia* 100 %
Thames Street Wharf Office Baltimore, Maryland** 100 %
Two Columbus Office Virginia Beach, Virginia* 100 %
249 Central Park Retail Retail Virginia Beach, Virginia* 100 %
Apex Entertainment Retail Virginia Beach, Virginia* 100 %
Broad Creek Shopping Center Retail Norfolk, Virginia 100 %
Broadmoor Plaza Retail South Bend, Indiana 100 %
Brooks Crossing Retail Retail Newport News, Virginia 65 % (2)
Columbus Village Retail Virginia Beach, Virginia* 100 %
Columbus Village II Retail Virginia Beach, Virginia* 100 %
Commerce Street Retail Retail Virginia Beach, Virginia* 100 %
Delray Beach Plaza Retail Delray Beach, Florida 100 %
Dimmock Square Retail Colonial Heights, Virginia 100 %
Fountain Plaza Retail Retail Virginia Beach, Virginia* 100 %
Greenbrier Square Retail Chesapeake, Virginia 100 %
Greentree Shopping Center Retail Chesapeake, Virginia 100 %

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Property Segment Location Ownership Interest
Hanbury Village Retail Chesapeake, Virginia 100 %
Harrisonburg Regal Retail Harrisonburg, Virginia 100 %
Lexington Square Retail Lexington, South Carolina 100 %
Market at Mill Creek Retail Mount Pleasant, South Carolina 70 % (2)
Marketplace at Hilltop Retail Virginia Beach, Virginia 100 %
Nexton Square Retail Summerville, South Carolina 100 %
North Hampton Market Retail Taylors, South Carolina 100 %
North Pointe Center Retail Durham, North Carolina 100 %
Overlook Village Retail Asheville, North Carolina 100 %
Parkway Centre Retail Moultrie, Georgia 100 %
Parkway Marketplace Retail Virginia Beach, Virginia 100 %
Patterson Place Retail Durham, North Carolina 100 %
Perry Hall Marketplace Retail Perry Hall, Maryland 100 %
Premier Retail Retail Virginia Beach, Virginia* 100 %
Providence Plaza Retail Charlotte, North Carolina 100 %
Red Mill Commons Retail Virginia Beach, Virginia 100 %
Sandbridge Commons Retail Virginia Beach, Virginia 100 % (3)
South Retail Retail Virginia Beach, Virginia* 100 %
South Square Retail Durham, North Carolina 100 %
Southgate Square Retail Colonial Heights, Virginia 100 %
Southshore Shops Retail Chesterfield, Virginia 100 %
Studio 56 Retail Retail Virginia Beach, Virginia* 100 %
Tyre Neck Harris Teeter Retail Portsmouth, Virginia 100 %
Wendover Village Retail Greensboro, North Carolina 100 %
1305 Dock Street Multifamily Baltimore, Maryland** 79 % (1)
1405 Point Multifamily Baltimore, Maryland** 100 %
Edison Apartments Multifamily Richmond, Virginia 100 %
Encore Apartments Multifamily Virginia Beach, Virginia* 100 %
Greenside Apartments Multifamily Charlotte, North Carolina 100 %
Liberty Apartments Multifamily Newport News, Virginia 100 %
Premier Apartments Multifamily Virginia Beach, Virginia* 100 %
Smith's Landing Multifamily Blacksburg, Virginia 100 %
The Cosmopolitan Multifamily Virginia Beach, Virginia* 100 %
The Residences at Annapolis Junction Multifamily Annapolis Junction, Maryland 95 % (2)(4)

*Located in the Town Center of Virginia Beach

**Located at Harbor Point in Baltimore

~~(1) We own a 90% economic interest in this property, including an 11% economic interest through a note receivable.~~

~~(2) We are entitled to a preferred return on our investment in this property.~~

~~(3) Held for sale as of June 30, 2022. On July 26, 2022, we sold the AutoZone and Valvoline outparcels of this property.~~

~~(4) Held for sale as of June 30, 2022. On July 22, 2022, we sold this property.~~


Property	Location	Ownership Interest
Office
Town Center of Virginia Beach
4525 Main Street*	Virginia Beach, Virginia	100	%
Armada Hoffler Tower*	Virginia Beach, Virginia	100	%
One Columbus*	Virginia Beach, Virginia	100	%
Two Columbus*	Virginia Beach, Virginia	100	%
Harbor Point - Baltimore Waterfront
Constellation Office*	Baltimore, Maryland	90	%
Thames Street Wharf*	Baltimore, Maryland	100	%
Wills Wharf*	Baltimore, Maryland	100	%
Southeast Sunbelt
One City Center*	Durham, North Carolina	100	%
The Interlock Office*	Atlanta, Georgia	100	%
Mid-Atlantic
Brooks Crossing Office*	Newport News, Virginia	100	%

Retail
Town Center of Virginia Beach
249 Central Park Retail*	Virginia Beach, Virginia	100	%
Apex Entertainment*	Virginia Beach, Virginia	100	%

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Columbus Village*	Virginia Beach, Virginia	100	%
Columbus Village II*	Virginia Beach, Virginia	100	%
Commerce Street Retail*	Virginia Beach, Virginia	100	%
Fountain Plaza Retail*	Virginia Beach, Virginia	100	%
Pembroke Square*	Virginia Beach, Virginia	100	%
Premier Retail*	Virginia Beach, Virginia	100	%
South Retail*	Virginia Beach, Virginia	100	%
Studio 56 Retail*	Virginia Beach, Virginia	100	%
Grocery Anchored
Broad Creek Shopping Center	Norfolk, Virginia	100	%
Broadmoor Plaza	South Bend, Indiana	100	%
Brooks Crossing Retail*	Newport News, Virginia	65	%	(1)
Delray Beach Plaza*	Delray Beach, Florida	100	%
Greenbrier Square	Chesapeake, Virginia	100	%
Greentree Shopping Center	Chesapeake, Virginia	100	%
Hanbury Village	Chesapeake, Virginia	100	%
Lexington Square	Lexington, South Carolina	100	%
Market at Mill Creek	Mount Pleasant, South Carolina	100	%
North Pointe Center	Durham, North Carolina	100	%
Parkway Centre	Moultrie, Georgia	100	%
Parkway Marketplace	Virginia Beach, Virginia	100	%
Perry Hall Marketplace	Perry Hall, Maryland	100	%
Sandbridge Commons	Virginia Beach, Virginia	100	%
Tyre Neck Harris Teeter	Portsmouth, Virginia	100	%
Southeast Sunbelt
Nexton Square*	Summerville, South Carolina	100	%
North Hampton Market	Taylors, South Carolina	100	%
Overlook Village	Asheville, North Carolina	100	%
Patterson Place	Durham, North Carolina	100	%
Providence Plaza*	Charlotte, North Carolina	100	%
South Square	Durham, North Carolina	100	%
The Interlock Retail*	Atlanta, Georgia	100	%
Wendover Village	Greensboro, North Carolina	100	%
Mid-Atlantic
Dimmock Square	Colonial Heights, Virginia	100	%
Harrisonburg Regal	Harrisonburg, Virginia	100	%
Marketplace at Hilltop	Virginia Beach, Virginia	100	%
Red Mill Commons	Virginia Beach, Virginia	100	%
Southgate Square	Colonial Heights, Virginia	100	%
Southshore Shops	Chesterfield, Virginia	100	%

Multifamily
Town Center of Virginia Beach
Encore Apartments*	Virginia Beach, Virginia	100	%
Premier Apartments*	Virginia Beach, Virginia	100	%
The Cosmopolitan*	Virginia Beach, Virginia	100	%
Harbor Point - Baltimore Waterfront

Table of ~~June 30, 2022, the following properties that we consolidate for financial reporting purposes were either under development or not yet stabilized:~~ Contents

Property Segment Location Ownership Interest
Wills Wharf Office Baltimore, Maryland** 100 %
Chronicle Mill Multifamily Belmont, North Carolina 85 % (1)
Gainesville Apartments Multifamily Gainesville, Georgia 95 % (2)
Southern Post Mixed-use Roswell, Georgia 100 %


1305 Dock Street*	Baltimore, Maryland	90	%
1405 Point*	Baltimore, Maryland	100	%
Southeast Sunbelt
Chronicle Mill*	Belmont, North Carolina	85	%	(1)
Greenside Apartments	Charlotte, North Carolina	100	%
The Everly(2)*	Gainesville, Georgia	100	%
Mid-Atlantic
The Edison*	Richmond, Virginia	100	%
Liberty Apartments*	Newport News, Virginia	100	%
Smith's Landing	Blacksburg, Virginia	100	%

**Located ~~at Harbor Point~~ in ~~Baltimore~~a mixed-use development.

(1) We are entitled to a preferred return on our investment in this property.

(2) ~~We were required to purchase our partner's ownership interest after completion~~Formerly known as Gainesville Apartments.

As of June 30, 2023, the ~~project, contingent upon obtaining a certificate of occupancy and achieving certain thresholds of net operating income. On April 11, 2022,~~following property, which we paid a $1.1 million earn-out to the partner due to the receipt of the certificate of occupancy. The remaining earn-out is estimated at $3.1 million and is expected to be paid out by the end of this year. Additionally, we anticipate there will be cost savings related to theconsolidate for financial reporting purposes, was under development ~~of the asset to be shared with our partner.~~or not yet stabilized:

Property

Segment

Location

Ownership Interest

Southern Post

Mixed-use

Roswell, Georgia

100

Acquisitions

On January 14, ~~2022,~~2023, we acquired ~~a 79% membership interest and~~ an additional 11% ~~economic~~membership interest in the ~~partnership~~Constellation Energy Building, increasing our ownership interest to 90%, in exchange for full satisfaction of the $12.8 million loan that ~~owns the Exelon Building for a purchase price of approximately $92.2 million in cash and a loan~~was extended to the seller of $12.8 million. The Exelon Building is a mixed-use structure located in Baltimore's Harbor Point and is comprised of an office building, the Exelon Office, that serves as the headquarters for Constellation Energy Corp., which was spun-off from Exelon, a Fortune 100 energy company, in February 2022, as well as a multifamily component, 1305 Dock Street. The Exelon Office also includes a parking garage and retail space. The Exelon Building was subject to a $156.1 million loan, which we immediately refinanced followingupon the acquisition ~~with a new $175.0 million loan. The new loan bears interest at a rate~~ of the Bloomberg Short-Term Bank Yield Index ("BSBY") plus a spread of 1.50% and will mature on November 1, 2026. This loan is hedged by an interest rate cap corridor of 1.00% and 3.00% as well as an interest rate cap of 4.00%.property in January 2022.

On ~~January 14, 2022,~~May 19, 2023, we acquired The Interlock, a 311,000 square foot Class A commercial mixed-use asset in West Midtown Atlanta anchored by Georgia Tech. The Interlock consists of office and retail space as well as structured parking. For segment reporting purposes, we separated the ~~remaining 20% ownership~~office and retail components of The Interlock into two operating properties respectively presented in the office and retail real estate segments. We acquired the asset for total consideration of $214.1 million plus capitalized acquisition costs of $1.2 million. As part of this acquisition, we paid $6.1 million in cash, redeemed our outstanding $90.2 million mezzanine loan, issued $12.2 million of Class A units of limited partnership interest in the ~~partnership~~Operating Partnership to the seller, and assumed the asset's senior construction loan of $105.6 million, that ~~is developing~~was paid off on the ~~Ten Tryon project in Charlotte, North Carolina for a cash payment of $3.9 million.~~

~~On April 11, 2022, we exercised our option to acquire an additional 16%~~acquisition date using the proceeds of the ~~partnership that owns The Residences at Annapolis Junction, increasing our ownership to 95%~~TD term loan facility and an increase in borrowings under the revolving credit facility (each as defined below).

~~Equity Method Investments~~

~~On April 1, 2022, we acquired a 78%~~ We also assumed the leasehold interest in Harbor Point Parcel 4, a real estate venture with Beatty Development Group, for purposes of developing a mixed-use project, which is planned to include multifamily units, retail space, and a parking garage. We holdthe underlying land owned by Georgia Tech. The ground lease has an ~~option to increase our ownership to 90%. We have a projected equity commitment of $100.0 million relating to this project, of which we had funded $19.7 million as of June 30, 2022.~~expiration in 2117 after considering renewal options.

Dispositions

On April ~~1, 2022,~~11, 2023, we completed the sale of ~~the Hoffler Place for~~ a ~~sale price of $43.1 million. The loss recognized upon sale was $0.8 million.~~

~~On April 25, 2022, we completed the sale~~non-operating outparcel at Market at Mill Creek in full satisfaction of the ~~Summit Place~~outstanding consideration payable for ~~a sale price~~the acquisition of ~~$37.8 million.~~the noncontrolling interest in the property completed on December 31, 2022. The ~~loss recognized upon sale~~gain recorded on this disposition was $0.5 million.

In addition to the losses recognized on the sales of the Hoffler Place and Summit Place student-housing properties during the three months ended June 30, 2022, we recognized impairment of real estate of $18.3 million to record these properties at their fair values during the three months ended December 31, 2021.Preferred Equity Investments

Solis Gainesville II

On ~~June~~March 29, ~~2022, we completed~~2023, the ~~sale~~Solis Gainesville II preferred equity investment was modified to adjust the interest rate. The interest rate of 14% remains effective through the first 24 months of the ~~Home Depot~~investment. Beginning on October 3, 2024, the investment will bear interest at a rate of 10% for 12 months. On October 3, 2025, the investment will again bear interest at a rate of 14% through maturity. Additionally, the amendment introduced an unused commitment fee of 10% on the unfunded portion of the investment's maximum loan commitment, which is effective January 1, 2023. Both the interest and ~~Costco outparcels at North Pointe for a sale price~~unused commitment fee compound annually. The preferred equity investment remains subject to minimum interest guarantee of ~~$23.9 million. The gain on disposition was $20.9 million.~~

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~~On July 22, 2022, we sold The Residences at Annapolis Junction for a sale price~~$5.9 million over the life of ~~$150.0 million. This property was classified as held for sale as of June 30, 2022.~~the investment.

Solis Kennesaw

On ~~July 26, 2022,~~May 25, 2023, we entered into a $37.9 million preferred equity investment for the ~~Company sold~~development of a multifamily property located in Marietta, Georgia. The investment has economic terms consistent with a note receivable, including a mandatory redemption or maturity on May 25, 2027, and it is accounted for as a note receivable. Our investment bears interest at a rate of 14.0% for the ~~AutoZone~~first 24 months. Beginning on May 25, 2025, the investment will bear interest at a rate of 9.0% for the following twelve months. On May 25, 2026, the investment will again bear interest at a rate of 14.0% through maturity. The interest compounds annually. We also earn an unused commitment fee of 11.0%, which does not compound, and ~~Valvoline outparcels at Sandbridge Commons for~~an equity fee on our commitment of $0.6 million to be amortized through redemption. The preferred equity investment is subject to a ~~sale price~~minimum interest guarantee of ~~$3.5 million. This property was classified as held for sale as~~$13.1 million over the life of ~~June 30, 2022.~~the investment.

Second Quarter ~~2022~~2023 and Recent Highlights

The following highlights our results of operations and significant transactions for the three months ended June 30, ~~2022~~2023 and other recent developments:

•Net income attributable to common stockholders and holders ("OP Unitholders") of units of limited partnership interest in the Operating Partnership ("OP ~~Unitholders"~~Units") of ~~$27.8~~$11.7 million, or ~~$0.31~~$0.13 per diluted share, compared to ~~$5.6~~$27.8 million, or ~~$0.07~~$0.31 per diluted share, for the three months ended June 30, ~~2021.~~2022.

•Funds from operations attributable to common stockholders and OP Unitholders ("FFO") of ~~$27.0~~$31.4 million, or ~~$0.31~~$0.35 per diluted share, compared to ~~$22.9~~$27.0 million, or ~~$0.28~~$0.31 per diluted share, for the three months ended June 30, ~~2021.~~2022. See "Non-GAAP Financial Measures."

•Normalized funds from operations ~~available~~attributable to common stockholders and OP Unitholders ("Normalized FFO") of ~~$26.2~~$28.3 million, or ~~$0.30~~$0.32 per diluted share, compared to ~~$23.4~~$26.2 million, or ~~$0.29~~$0.30 per diluted share, for the three months ended June 30, ~~2021. See "Non-GAAP Financial Measures."~~2022.

•Completed the previously announced $215 million acquisition of The Interlock, a 311,000 square foot Class A commercial mixed-use asset in Atlanta's West Midtown anchored by Georgia Tech.

•Announced the authorization of the repurchase of up to $50 million of the Company's shares of common stock and Series A Preferred Stock (as defined below) under a ~~third quarter cash dividend of $0.19 per common~~newly established share ~~a 12% increase over the prior quarter's dividend.~~repurchase program.

•~~Stabilized operating property~~Maintained a weighted 97% average portfolio occupancy ~~increased to 97.3%~~ as of June 30, ~~2022. Office~~2023. Multifamily occupancy was ~~97.9%~~96%, office occupancy was 96%, and retail occupancy was ~~97.1%,~~98%.

•Positive renewal spreads during the second quarter in both the office and ~~multifamily occupancy was 97.2%.~~retail segments:

◦Lease rates on second quarter commercial lease renewals increased 8.9% on a GAAP basis.

•Same Store ~~net operating income ("NOI")~~NOI increased ~~6.0%~~4.8% on a GAAP ~~(as defined below)~~ basis compared to the quarter ended June 30, ~~2021.~~2022:

◦Multifamily ~~same store~~Same Store NOI increased ~~12.5%~~4.3% on a GAAP basis.

◦~~Commercial same store~~Office Same Store NOI increased ~~4.1%~~1.3% on a GAAP basis.

◦Retail Same Store NOI increased 7.5% on a GAAP basis.

•Third-party construction backlog ~~totaling $541~~as of June 30, 2023 was $593 million ~~highest in the Company's history~~

•~~Positive releasing spreads during~~and construction gross profit for the second quarter ~~of 9.9% on a GAAP basis for retail and 13.1% on a GAAP basis for office.~~

•~~Achieved an 8.1% increase in rental rates on apartment trade outs across the multifamily segment.~~

•~~Completed $177 million of sales of noncore assets~~

◦~~The Residences at Annapolis Junction in Baltimore for $150 million~~

◦~~Two outparcels at North Pointe in Durham, North Carolina for $23.9 million~~

◦~~Two outparcels at Sandbridge Commons in Virginia Beach for~~was $3.5 million

•~~Appointed Dennis H. Gartman, renowned investor, economist,~~Committed an aggregate of $75 million of new investments across three ground-up multifamily development projects located in the Atlanta and ~~longtime publisher of “The Gartman Letter,” as a member of our board of directors. He is the sixth independent member.~~Coastal Virginia markets.

•~~Executed a~~Commemorated the topping out of T. Rowe Price's new ~~office lease with Franklin Templeton for 60,000 square feet at the Company’s Wills Wharf office~~global headquarters building in ~~Baltimore’s~~ Harbor Point, ~~neighborhood. The investment management firm has agreed to lease~~with completion anticipated in the ~~entire fifth floor and a portion~~third quarter of ~~the fourth floor of Wills Wharf and will bring the building to 91% occupancy.~~2024.

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Segment Results of Operations

As of June 30, ~~2022,~~2023, we operated our business in ~~four~~five segments: (i) office real estate, (ii) retail real estate, (iii) multifamily ~~residential~~ real estate, ~~and~~ (iv) general contracting and real estate services, ~~which are~~and (v) real estate financing. Our general contracting and real estate services segment is conducted through our taxable REIT ~~subsidiaries~~subsidiary ("TRS"). Net operating income ~~(segment revenues minus segment expenses)~~ ("NOI") is the primary measure used by ~~management~~our chief operating decision-maker to assess segment performance and allocate our resources among our segments. We calculate NOI as segment revenues less segment expenses. Segment revenues include rental revenues for our property segments, general contracting and real estate services revenues for our general contracting and real estate services segment, and interest income for our real estate financing segment. Segment expenses include rental expenses and real estate taxes for our property segments, general contracting and real estate services expenses for our general contracting and real estate services segment, and interest expense for our real estate financing segment. NOI is not a measure of operating income or cash flows from operating activities as measured by accounting principles generally accepted in the United

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States ("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 condensed consolidated financial statements in Item 1 of this Quarterly Report on Form 10-Q for a reconciliation of NOI to net income, the most directly comparable GAAP measure.

We define same store properties as those properties that we owned and operated and that were stabilized for the entirety of both periods presented. 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 occupancy criterion above is 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.

Office Segment Data

Office rental revenues, property expenses, and NOI for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Rental revenues	Rental revenues	$	18,314	$	11,756	$	6,558	$	35,337	$	23,391	$	11,946	Rental revenues	$	20,505	$	18,314	$	2,191	$	40,079	$	35,337	$	4,742
Property expenses	Property expenses	6,635		4,351		2,284		12,279		8,584		3,695		Property expenses	7,421		6,635		786		14,619		12,279		2,340
Segment NOI	Segment NOI	$	11,679	$	7,405	$	4,274	$	23,058	$	14,807	$	8,251	Segment NOI	$	13,084	$	11,679	$	1,405	$	25,460	$	23,058	$	2,402

Office segment NOI for the three and six months ended June 30, ~~2022~~2023 increased ~~57.7%~~12.0% and ~~55.7%~~10.4%, respectively, compared to the three and six months ended June 30, ~~2021~~2022 primarily due to the acquisition of ~~the Exelon~~The Interlock Office in ~~January 2022.~~May 2023 as well as increased occupancy at Wills Wharf.

Office Same Store Results

Office same store results for the three months ended June 30, 2023 and 2022 exclude Wills Wharf and The Interlock Office. Office same store results for the six months ended June 30, 2023 and 2022 ~~and 2021~~also exclude ~~Wills Wharf and~~ the ~~Exelon~~Constellation Office.

Office same store rental revenues, property expenses, and NOI for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 Change 2022 2021 Change
Rental revenues $ 10,371 $ 10,290 $ 81 $ 20,546 $ 20,500 $ 46
Property expenses 3,697 3,527 170 7,259 7,011 248
Same Store NOI $ 6,674 $ 6,763 $ (89) $ 13,287 $ 13,489 $ (202)
Non-Same Store NOI 5,005 642 4,363 9,771 1,318 8,453
Segment NOI $ 11,679 $ 7,405 $ 4,274 $ 23,058 $ 14,807 $ 8,251

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	Three Months Ended June 30,						Six Months Ended June 30,
	2023		2022		Change		2023		2022		Change
Rental revenues	$	16,828	$	16,510	$	318	$	21,053	$	20,546	$	507
Property expenses	5,562		5,387		175		7,820		7,259		561
Same Store NOI	$	11,266	$	11,123	$	143	$	13,233	$	13,287	$	(54)
Non-Same Store NOI	1,818		556		1,262		12,227		9,771		2,456
Segment NOI	$	13,084	$	11,679	$	1,405	$	25,460	$	23,058	$	2,402

Office same store NOI for the three and six months ended June 30, ~~2022~~2023 was materially consistent with the three and six months ended June 30, ~~2021.~~2022.

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Retail Segment Data

Retail rental revenues, property expenses, and NOI for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Rental revenues	Rental revenues	$	21,544	$	19,204	$	2,340	$	42,974	$	37,459	$	5,515	Rental revenues	$	24,708	$	21,544	$	3,164	$	47,146	$	42,974	$	4,172
Property expenses	Property expenses	5,604		5,193		411		11,343		10,056		1,287		Property expenses	6,296		5,604		692		12,067		11,343		724
Segment NOI	Segment NOI	$	15,940	$	14,011	$	1,929	$	31,631	$	27,403	$	4,228	Segment NOI	$	18,412	$	15,940	$	2,472	$	35,079	$	31,631	$	3,448

Retail segment NOI for the three and six months ended June 30, ~~2022~~2023 increased ~~13.8%~~15.5% and ~~15.4%~~10.9%, respectively, compared to the three and six months ended June 30, ~~2021~~2022, primarily due to the ~~acquisitions~~acquisition of ~~Delray Beach Plaza, Greenbrier~~The Interlock Retail in May 2023 and Pembroke Square ~~and Overlook Village, as well as increased occupancy~~ in ~~the same store portfolio.~~November 2022.

Retail Same Store Results

Retail same store results for the three ~~and six~~ months ended June 30, 2023 and 2022 exclude Pembroke Square and 2021 exclude Greenbrier Square, Overlook Village, the outparcels that were classified as held for sale at Sandbridge Commons as of June 30, 2022, and properties that were disposed in 2021 and 2022. Retail same store results for the six months ended June 30, 2022 and June 30, 2021 also exclude Delray Beach Plaza and PremierThe Interlock Retail.

Retail same store rental revenues, property expenses, and NOI for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Rental revenues	Rental revenues	$	19,736	$	18,686	$	1,050	$	36,422	$	34,063	$	2,359	Rental revenues	$	22,658	$	21,254	$	1,404	$	44,418	$	42,385	$	2,033
Property expenses	Property expenses	4,983		4,857		126		9,241		8,737		504		Property expenses	5,506		5,292		214		10,802		10,733		69
Same Store NOI	Same Store NOI	$	14,753	$	13,829	$	924	$	27,181	$	25,326	$	1,855	Same Store NOI	$	17,152	$	15,962	$	1,190	$	33,616	$	31,652	$	1,964
Non-Same Store NOI	Non-Same Store NOI	1,187		182		1,005		4,450		2,077		2,373		Non-Same Store NOI	1,260		(22)		1,282		1,463		(21)		1,484
Segment NOI	Segment NOI	$	15,940	$	14,011	$	1,929	$	31,631	$	27,403	$	4,228	Segment NOI	$	18,412	$	15,940	$	2,472	$	35,079	$	31,631	$	3,448

Retail same store NOI for the three and six months ended June 30, ~~2022~~2023 increased ~~6.7%~~7.5% and ~~7.3%~~6.2%, respectively, compared to the three and six months ended June 30, ~~2021,~~2022, primarily due to ~~increased~~higher occupancy throughout the portfolio.

Table of Contents

Multifamily Segment Data

Multifamily rental revenues, property expenses, and NOI for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Rental revenues	Rental revenues	$	15,366	$	16,418	$	(1,052)	$	31,548	$	32,269	$	(721)	Rental revenues	$	14,738	$	15,366	$	(628)	$	28,944	$	31,548	$	(2,604)
Property expenses	Property expenses	6,283		7,213		(930)		12,973		14,255		(1,282)		Property expenses	5,590		6,283		(693)		10,993		12,973		(1,980)
Segment NOI	Segment NOI	$	9,083	$	9,205	$	(122)	$	18,575	$	18,014	$	561	Segment NOI	$	9,148	$	9,083	$	65	$	17,951	$	18,575	$	(624)

Multifamily segment NOI for the three months ended June 30, ~~2022 decreased 1.3% compared to~~2023 was materially consistent with the three months ended June 30, 2021 primarily due to the dispositions of Johns Hopkins Village, Hoffler Place, and Summit Place. The decrease was partially offset by the acquisition of 1305 Dock Street, Gainesville Apartments beginning operations, and increased rental rates across multiple properties.2022. Multifamily segment NOI for the six months ended June 30, ~~2022 increased 3.1%~~2023 decreased 3.4%, compared to the six months ended June 30, ~~2021~~2022, primarily due to the ~~acquisition~~dispositions of ~~1305 Dock Street~~The Residences of Annapolis Junction in July 2022, Hoffler Place in April 2022, and Summit Place in April 2022. The decrease was partially offset by the ~~beginning~~commencement of operations at ~~Gainesville Apartments as well as higher occupancy, increased rental rates across multiple properties,~~The Everly and ~~a decrease in expense per unit.~~Chronicle Mill.

~~Table of Contents~~

Multifamily Same Store Results

Multifamily same store results for the three and six months ended June 30, 2023 and 2022 exclude Chronicle Mill and ~~2021~~The Everly as well as The Residences of Annapolis Junction, Hoffler Place, and Summit Place, which were disposed in 2022. Multifamily same store results for the six months ended June 30, 2023 and 2022 also exclude 1305 Dock ~~Street, Gainesville Apartments, and The Residences at Annapolis Junction, which was classified as held for sale as of June 30, 2022, as well as properties that were disposed in 2021 and 2022.~~Street.

Multifamily same store rental revenues, property expenses and NOI for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Rental revenues	Rental revenues	$	10,958	$	10,131	$	827	$	21,679	$	19,775	$	1,904	Rental revenues	$	12,275	$	11,672	$	603	$	22,831	$	21,679	$	1,152
Property expenses	Property expenses	4,085		4,022		63		8,107		7,946		161		Property expenses	4,702		4,409		293		8,618		8,108		510
Same Store NOI	Same Store NOI	$	6,873	$	6,109	$	764	$	13,572	$	11,829	$	1,743	Same Store NOI	$	7,573	$	7,263	$	310	$	14,213	$	13,571	$	642
Non-Same Store NOI	Non-Same Store NOI	2,210		3,096		(886)		5,003		6,185		(1,182)		Non-Same Store NOI	1,575		1,820		(245)		3,738		5,004		(1,266)
Segment NOI	Segment NOI	$	9,083	$	9,205	$	(122)	$	18,575	$	18,014	$	561	Segment NOI	$	9,148	$	9,083	$	65	$	17,951	$	18,575	$	(624)

Multifamily same store NOI for the three and six months ended June 30, ~~2022~~2023 increased ~~12.5%~~4.3% and ~~14.7%~~4.7%, respectively, compared to the three and six months ended June 30, ~~2021~~2022, primarily due to increased rental rates ~~and higher occupancy rates in the same store portfolio.~~across multiple properties.

General Contracting and Real Estate Services Segment Data

General contracting and real estate services revenues, expenses, and gross profit for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):


		Three Months Ended June 30,									Six Months Ended June 30,										Three Months Ended June 30,									Six Months Ended June 30,
		2022			2021			Change			2022			2021			Change				2023			2022			Change			2023			2022			Change
Segment revenues		$	45,273		$	18,408		$	26,865		$	69,923		$	53,971		$	15,952
Segment expenses		43,418			18,131			25,287			67,239			52,406			14,833
General contracting and real estate services revenues																				General contracting and real estate services revenues	$	102,574		$	45,273		$	57,301		$	186,812		$	69,923		$	116,889
General contracting and real estate services expenses																				General contracting and real estate services expenses	99,071			43,418			55,653			180,241			67,239			113,002
Segment gross profit	Segment gross profit	$	1,855		$	277		$	1,578		$	2,684		$	1,565		$	1,119		Segment gross profit	$	3,503		$	1,855		$	1,648		$	6,571		$	2,684		$	3,887
Operating margin	Operating margin	4.1		%	1.5		%	2.6		%	3.8		%	2.9		%	0.9		%	Operating margin	3.4		%	4.1		%	(0.7)		%	3.5		%	3.8		%	(0.3)		%

General contracting and real estate services segment gross profit for the three and six months ended June 30, ~~2022~~2023 increased by $1.6 million and ~~$1.1~~$3.9 million, respectively, compared to the three and six months ended June 30, ~~2021~~2022, primarily due to ~~a greater number~~the increase in backlog and the revenue and expenses associated with these contracts.

Table of ~~third party contracts undertaken in 2022.~~Contents

The changes in third party construction backlog for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Beginning backlog	Beginning backlog	$	419,439	$	38,838	$	215,518	$	71,258	Beginning backlog	$	651,840	$	419,439	$	665,564	$	215,518
New contracts/change orders	New contracts/change orders	167,143		50,278		395,746		53,402		New contracts/change orders	43,975		167,143		114,767		395,746
Work performed	Work performed	(45,368)		(18,897)		(70,050)		(54,441)		Work performed	(103,029)		(45,368)		(187,545)		(70,050)
Ending backlog	Ending backlog	$	541,214	$	70,219	$	541,214	$	70,219	Ending backlog	$	592,786	$	541,214	$	592,786	$	541,214

As of June 30, ~~2022,~~2023, we had ~~$111.0~~$319.0 million in the backlog relating to the Harbor Point Parcel ~~4 project, $155.1 million in the backlog on the Harbor Point Parcel 3 project, and $51.8 million in the backlog on the Slater Road Apartments project. The amounts relating to our Harbor Point Parcel~~ 3 and Harbor Point Parcel 4 ~~projects pertain~~developments in Baltimore.

Real Estate Financing Segment Data

During the first quarter of 2023, we updated our reportable segments to include real estate financing. This segment includes our mezzanine loans and preferred equity ~~method~~ investments ~~for which~~on development projects. The addition of the real estate financing segment is consistent with how we view our operating performance and how the chief operational decision maker allocates our resources. The change in segmental presentation is a ~~portion~~result of our ~~profit margin will~~continued investment in development projects through financing, which we no longer consider to be ~~eliminated~~ad hoc investments, but an evolving portfolio. We also believe this change in segmental presentation further assists stockholders in assessing pertinent information about our operating performance. Our goal is to target approximately $80.0 million in outstanding principal of real estate financing investments. We underwrite these investments from a position of potential ownership. The real estate financing portfolio thereby serves as a development pipeline, particularly for growth in our ~~operating results.~~multifamily real estate segment.

Real estate financing interest income, interest expense, and gross profit for the three and six months ended June 30, 2023 and 2022 were as follows (in thousands):


	Three Months Ended June 30,									Six Months Ended June 30,
	2023			2022			Change			2023			2022			Change
Interest income	$	3,225		$	3,239		$	(14)		$	6,761		$	6,698		$	63
Interest expense	809			817			(8)			1,906			1,642			264
Segment gross profit	$	2,416		$	2,422		$	(6)		$	4,855		$	5,056		$	(201)
Operating margin	74.9		%	74.8		%	0.1		%	71.8		%	75.5		%	(3.7)		%

Real estate financing gross profit for the three months ended June 30, 2023 was materially consistent with the three months ended June 30, 2022. Real estate financing gross profit for the six months ended June 30, 2023 decreased 4.0% compared to the six months ended June 30, 2022 due to higher interest expense as a result of higher average principal outstanding on mezzanine loans and preferred equity investments, as well as rising interest rates.

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Consolidated Results of Operations

The following table summarizes the results of operations for the three and six months ended June 30, 2023 and 2022 ~~and 2021 (in~~(unaudited, in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change		2022		2021		Change			Three Months Ended June 30,						Six Months Ended June 30,
		(unaudited)													2023		2022		Change		2023		2022		Change
Revenues	Revenues													Revenues
Rental revenues	Rental revenues	$	55,224	$	47,378	$	7,846	$	109,859	$	93,119	$	16,740	Rental revenues	$	59,951	$	55,224	$	4,727	$	116,169	$	109,859	$	6,310
General contracting and real estate services revenues	General contracting and real estate services revenues	45,273		18,408		26,865		69,923		53,971		15,952		General contracting and real estate services revenues	102,574		45,273		57,301		186,812		69,923		116,889
Interest income														Interest income	3,414		3,352		62		7,133		6,920		213
Total revenues	Total revenues	100,497		65,786		34,711		179,782		147,090		32,692		Total revenues	165,939		103,849		62,090		310,114		186,702		123,412

Expenses	Expenses													Expenses
Rental expenses	Rental expenses	12,685		11,292		1,393		25,354		22,124		3,230		Rental expenses	13,676		12,685		991		26,636		25,354		1,282
Real estate taxes	Real estate taxes	5,837		5,465		372		11,241		10,771		470		Real estate taxes	5,631		5,837		(206)		11,043		11,241		(198)
General contracting and real estate services expenses	General contracting and real estate services expenses	43,418		18,131		25,287		67,239		52,406		14,833		General contracting and real estate services expenses	99,071		43,418		55,653		180,241		67,239		113,002
Depreciation and amortization	Depreciation and amortization	18,781		17,285		1,496		37,338		35,351		1,987		Depreciation and amortization	19,878		18,781		1,097		38,346		37,338		1,008
Amortization of right-of-use assets - finance leases	Amortization of right-of-use assets - finance leases	277		278		(1)		555		467		88		Amortization of right-of-use assets - finance leases	347		277		70		624		555		69
General and administrative expenses	General and administrative expenses	3,617		3,487		130		8,325		7,508		817		General and administrative expenses	4,052		3,617		435		9,500		8,325		1,175
Acquisition, development and other pursuit costs	Acquisition, development and other pursuit costs	26		32		(6)		37		103		(66)		Acquisition, development and other pursuit costs	18		26		(8)		18		37		(19)
Impairment charges	Impairment charges	286		83		203		333		3,122		(2,789)		Impairment charges	—		286		(286)		102		333		(231)
Total expenses	Total expenses	84,927		56,053		28,874		150,422		131,852		18,570		Total expenses	142,673		84,927		57,746		266,510		150,422		116,088
Gain on real estate dispositions, net	Gain on real estate dispositions, net	19,493		—		19,493		19,493		3,717		15,776		Gain on real estate dispositions, net	511		19,493		(18,982)		511		19,493		(18,982)
Operating income	Operating income	35,063		9,733		25,330		48,853		18,955		29,898		Operating income	23,777		38,415		(14,638)		44,115		55,773		(11,658)
Interest income		3,352		6,746		(3,394)		6,920		10,862		(3,942)
Interest expense	Interest expense	(9,371)		(8,418)		(953)		(18,402)		(16,393)		(2,009)		Interest expense	(13,629)		(9,371)		(4,258)		(25,931)		(18,402)		(7,529)

Loss on extinguishment of debt	Loss on extinguishment of debt	(618)		—		(618)		(776)		—		(776)		Loss on extinguishment of debt	—		(618)		618		—		(776)		776
Change in fair value of derivatives and other	Change in fair value of derivatives and other	2,548		314		2,234		6,730		707		6,023		Change in fair value of derivatives and other	5,005		2,548		2,457		2,558		6,730		(4,172)
Unrealized credit loss provision	Unrealized credit loss provision	(295)		(388)		93		(900)		(333)		(567)		Unrealized credit loss provision	(100)		(295)		195		(177)		(900)		723
Other income (expense), net	Other income (expense), net	68		7		61		297		186		111		Other income (expense), net	168		68		100		261		297		(36)
Income before taxes	Income before taxes	30,747		7,994		22,753		42,722		13,984		28,738		Income before taxes	15,221		30,747		(15,526)		20,826		42,722		(21,896)
Income tax benefit		20		461		(441)		321		480		(159)
Income tax (provision) benefit														Income tax (provision) benefit	(336)		20		(356)		(524)		321		(845)
Net income	Net income	30,767		8,455		22,312		43,043		14,464		28,579		Net income	14,885		30,767		(15,882)		20,302		43,043		(22,741)
Net income attributable to noncontrolling interests in investment entities	Net income attributable to noncontrolling interests in investment entities	(128)		—		(128)		(228)		—		(228)		Net income attributable to noncontrolling interests in investment entities	(269)		(128)		(141)		(423)		(228)		(195)
Preferred stock dividends	Preferred stock dividends	(2,887)		(2,887)		—		(5,774)		(5,774)		—		Preferred stock dividends	(2,887)		(2,887)		—		(5,774)		(5,774)		—
Net income attributable to common stockholders and OP Unitholders	Net income attributable to common stockholders and OP Unitholders	$	27,752	$	5,568	$	22,184	$	37,041	$	8,690	$	28,351	Net income attributable to common stockholders and OP Unitholders	$	11,729	$	27,752	$	(16,023)	$	14,105	$	37,041	$	(22,936)

Rental revenues for the three and six months ended June 30, ~~2022~~2023 increased ~~16.6%~~8.6% and ~~18.0%~~5.7%, respectively, compared to the three and six months ended June 30, ~~2021~~2022 as follows (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Office	Office	$	18,314	$	11,756	$	6,558	$	35,337	$	23,391	$	11,946	Office	$	20,505	$	18,314	$	2,191	$	40,079	$	35,337	$	4,742
Retail	Retail	21,544		19,204		2,340		42,974		37,459		5,515		Retail	24,708		21,544		3,164		47,146		42,974		4,172
Multifamily	Multifamily	15,366		16,418		(1,052)		31,548		32,269		(721)		Multifamily	14,738		15,366		(628)		28,944		31,548		(2,604)
		$	55,224	$	47,378	$	7,846	$	109,859	$	93,119	$	16,740		$	59,951	$	55,224	$	4,727	$	116,169	$	109,859	$	6,310

3234

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Office rental revenues for the three and six months ended June 30, ~~2022~~2023 increased ~~55.8%~~12.0% and ~~51.1%~~13.4%, respectively, compared to the three and six months ended June 30, ~~2021~~2022, primarily as a result of the acquisition of ~~the Exelon~~The Interlock Office ~~and an increase~~ in ~~rental expense recoveries~~May 2023 as well as higher occupancy at Wills ~~Wharf due to higher occupancy.~~Wharf.

Retail rental revenues for the three and six months ended June 30, ~~2022~~2023 increased ~~12.2%~~14.7% and ~~14.7%~~9.7%, respectively, compared to the three and six months ended June 30, ~~2021~~2022, primarily as a result of the acquisitions of Greenbrier Square and Overlook Village, as well as higher occupancy at multiple properties. The increase was partially offset by the dispositions of Oakland Marketplace and Socastee Commons. The increase in retail rental revenues for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was further due to the acquisition of ~~Delray Beach Plaza~~The Interlock Retail in ~~February 2021.~~May 2023 and Pembroke Square in November 2022.

Multifamily rental revenues for the three and six months ended June 30, ~~2022~~2023 decreased ~~6.4%~~4.1% and ~~2.2%~~8.3%, respectively, compared to the three and six months ended June 30, ~~2021~~2022, primarily as a result of the dispositions of ~~Johns Hopkins Village,~~The Residences of Annapolis Junction in July 2022, Hoffler Place in April 2022, and Summit ~~Place.~~Place in April 2022. The decrease was partially offset by the ~~acquisition of 1305 Dock Street, the beginning~~commencement of operations at ~~Gainesville Apartments,~~The Everly and ~~higher occupancy and rental rates at multiple properties.~~Chronicle Mill.

General contracting and real estate services revenues for the three and six months ended June 30, ~~2022~~2023 increased ~~145.9%~~$57.3 million and ~~29.6%,~~$116.9 million, respectively, compared to the three and six months ended June 30, ~~2021~~2022 due to the timing of commencement of new third party construction projects in ~~2022~~2023 and the completion of other projects.

Interest income for the three and six months ended June 30, 2023 increased 1.8% and 3.1%, respectively, compared to the three and six months ended June 30, 2022, primarily due to a higher notes receivable balance in the current period from the Solis City Park II and Solis Gainesville II real estate financing investments. This increase was partially offset by the repayment of the Nexton Multifamily real estate financing investment during the fourth quarter of 2022.

Rental expenses for the three and six months ended June 30, ~~2022~~2023 increased ~~12.3%~~7.8% and ~~14.6%~~5.1%, respectively, compared to the three and six months ended June 30, ~~2021~~2022 as follows (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Office	Office	$	4,600	$	2,938	$	1,662	$	8,740	$	5,813	$	2,927	Office	$	5,254	$	4,600	$	654	$	10,357	$	8,740	$	1,617
Retail	Retail	3,333		3,013		320		6,834		5,849		985		Retail	4,026		3,333		693		7,590		6,834		756
Multifamily	Multifamily	4,752		5,341		(589)		9,780		10,462		(682)		Multifamily	4,396		4,752		(356)		8,689		9,780		(1,091)
		$	12,685	$	11,292	$	1,393	$	25,354	$	22,124	$	3,230		$	13,676	$	12,685	$	991	$	26,636	$	25,354	$	1,282

Office rental expenses for the three and six months ended June 30, ~~2022~~2023 increased ~~56.6%~~14.2% and ~~50.4%~~18.5%, respectively, compared to the three and six months ended June 30, ~~2021~~2022, primarily due to the acquisition of ~~the Exelon~~The Interlock in May 2023 and Constellation Office ~~and the addition of new tenants at Wills Wharf.~~in January 2022.

Retail rental expenses for the three and six months ended June 30, ~~2022~~2023 increased ~~10.6%~~20.8% and ~~16.8%~~11.1%, respectively, compared to the three and six months ended June 30, ~~2021~~2022, primarily due to the acquisitions of Greenbrier Square and Overlook Village. The increase in retail rental expenses for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was further due to the acquisition of ~~Delray Beach Plaza~~The Interlock Retail in ~~February 2021, which was partially offset by the dispositions of Oakland Marketplace~~May 2023 and ~~Socastee Commons.~~Pembroke Square in November 2022.

Multifamily rental expenses for the three and six months ended June 30, ~~2022~~2023 decreased ~~11.0%~~7.5% and ~~6.5%~~11.2%, respectively, compared to the three and six months ended June 30, ~~2021~~2022, primarily due to ~~the~~ dispositions of ~~Johns Hopkins Village,~~The Residences of Annapolis Junction in July 2022, Hoffler Place in April 2022, and Summit ~~Place.~~Place in April 2022. The decrease was partially offset by the ~~acquisition of 1305 Dock Street and the beginning~~commencement of operations ~~of Gainesville Apartments.~~at The Everly and Chronicle Mill.

Real estate taxes for the three and six months ended June 30, ~~2022~~2023 decreased 3.5% and ~~2021 increased 6.8% and 4.4%~~1.8%, respectively, compared to the three and six months ended June 30, ~~2021~~2022 as follows (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change
Office	Office	$	2,035	$	1,413	$	622	$	3,539	$	2,771	$	768	Office	$	2,167	$	2,035	$	132	$	4,262	$	3,539	$	723
Retail	Retail	2,271		2,180		91		4,509		4,207		302		Retail	2,270		2,271		(1)		4,477		4,509		(32)
Multifamily	Multifamily	1,531		1,872		(341)		3,193		3,793		(600)		Multifamily	1,194		1,531		(337)		2,304		3,193		(889)
		$	5,837	$	5,465	$	372	$	11,241	$	10,771	$	470		$	5,631	$	5,837	$	(206)	$	11,043	$	11,241	$	(198)

Office real estate taxes for the three ~~and~~months ended June 30, 2023 increased 6.5% compared to the three months ended June 30, 2022, primarily due to increases in property assessments. Office real estate taxes for the six months ended June 30, 2022 increased 44.0% and 27.7%, respectively, compared to the three and six months ended June 30, 2021 primarily due to the acquisition of the Exelon Office and Wills Wharf being fully placed into service in June 2021.

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2023 increased 20.4% compared to the six months ended June 30, 2022, primarily due to recognized real estate tax refunds at Wills Wharf in the first quarter of 2022, the acquisition of the Constellation Office in January 2022, and increases in property assessments.

Retail real estate taxes for the three and six months ended June 30, 2023 and 2022 ~~increased 4.2% and 7.2%, respectively, compared to the three and six months ended June 30, 2021 primarily as a result of the acquisitions of Greenbrier Square and Overlook Village, which~~ were partially offset by the dispositions of Oakland Marketplace and Socastee Commons. The increase in retail real estate taxes for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was further due to the acquisition of Delray Beach Plaza in February 2021.materially consistent.

Multifamily real estate taxes for the three and six months ended June 30, ~~2022~~2023 decreased ~~18.2%~~22.0% and ~~15.8%~~27.8%, respectively, compared to the three and six months ended June 30, ~~2021~~2022, primarily due to ~~the~~ dispositions of ~~Johns Hopkins Village,~~The Residences of Annapolis Junction in July 2022, Hoffler Place in April 2022, and Summit ~~Place. The decrease was partially offset by the acquisition of 1305 Dock Street and the beginning of operations of Gainesville Apartments.~~Place in April 2022.

General contracting and real estate services expenses for the three and six months ended June 30, ~~2022~~2023 increased ~~139.5%~~$55.7 million and ~~28.3%,~~$113.0 million, respectively, compared to the three and six months ended June 30, ~~2021~~2022 due to new third party contracts undertaken in ~~2022.~~2023.

Depreciation and amortization for the three and six months ended June 30, ~~2022~~2023 increased ~~8.7%~~5.8% and ~~5.6%~~2.7%, respectively, compared to the three and six months ended June 30, ~~2021~~2022, primarily due to ~~property acquisitions~~the acquisition of The Interlock in May 2023 and ~~development deliveries. The increases were partially offset by dispositions~~Pembroke Square in ~~2021 and certain assets that became fully depreciated.~~November 2022.

Amortization of right-of-use assets - finance leases for the three and six months ended June 30, ~~2022 decreased immaterially~~2023 increased 25.3% and 12.4%, respectively compared to the three ~~months ended June 30, 2021. Amortization of right-of-use assets - finance leases for the~~and six months ended June 30, 2022, ~~increased 18.8% compared to the six months ended June 30, 2021~~ primarily due to the ground lease assumed in conjunction with the acquisition of ~~Delray Beach Plaza, which was partially amortized in the six months ended June 30, 2021 compared to a full period of amortization recognized in the six months ended June 30, 2022.~~The Interlock.

General and administrative expenses for the three and six months ended June 30, ~~2022~~2023 increased ~~3.7%~~12.0% and ~~10.9%~~14.1%, respectively, compared to the three and six months ended June 30, ~~2021~~2022, primarily due to higher compensation, benefits, and training and development costs resulting from increased investment in human capital, ~~and sustainability initiatives.~~as well as an increase in professional services expense.

Acquisition, development and other pursuit costs for the three and six months ended June 30, ~~2022 decreased 18.8% and 64.1%, respectively, compared to~~2023 were materially consistent with the three and six months ended June 30, ~~2021 as a result of a lower write off of costs for the three and six months ended June 30, 2021 relating to certain development projects and acquisitions that are no longer probable.~~2022.

~~Impairment charges for the six months ended June 30, 2021 relate to the impairment recognized on Socastee Commons.~~ Impairment charges for the three and six months ended June 30, ~~2022~~2023 and ~~the three months ended June 30, 2021 were not material.~~

Gain on real estate dispositions, net for the three and six months ended June 30, 2021 relates to the sale of the 7-Eleven at Hanbury Village, Oakland Marketplace, and easement rights at a non-operating land parcel. The gain on real estate dispositions, net for the three and six months ended June 30, 2022 ~~relates to the dispositions of the Home Depot and Costco parcels at North Pointe.~~

Interest income for the three and six months ended June 30, 2022 decreased 50.3% and 36.3%, respectively, compared to the three and six months ended June 30, 2021, primarily as a result of the lower notes receivable balance in the current period due to the repayment of portions of our mezzanine loans during 2021 and 2022. This was partially offset by increased borrowings for the Nexton Multifamily and City Park 2 preferred equity investments.were immaterial.

Interest expense for the three and six months ended June 30, ~~2022~~2023 increased ~~11.3%~~45.4% and ~~12.3%~~40.9%, respectively, compared to the three and six months ended June 30, ~~2021,~~2022, primarily due to ~~the loans obtained and assumed~~higher levels of average indebtedness in connection with the funding of development projects, real estate financing investments, and acquisitions, partially offset by ~~those~~debt paid off in connection with dispositions. The increase is also attributable to the amortization of additional debt financing costs, as well as rising interest rates, largely offset by hedging interest rate derivatives.

There was no loss on extinguishment of debt for the three and six months ended June 30, 2023. Loss on extinguishment of debt of $0.6 million and $0.8 million for the three and six months ended June 30, 2022, respectively, primarily relates to the loan payoffs of Red Mill West and Delray Beach Plaza, the refinance of Nexton Square, and the loan payoffs associated with the dispositions of Hoffler Place, Summit Place, and the Costco outparcel at North Pointe. ~~There was no loss on extinguishment of debt recognized for the three and six months ended June 30, 2021.~~

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The change in fair value of derivatives and other for the three and six months ended June 30, ~~2022~~2023 includes fair value increases for our derivative instruments due to increases in forward LIBOR (the London Inter-Bank Offered Rate), SOFR (the Secured Overnight Financing Rate) and ~~BSBY.~~BSBY (the Bloomberg Short-Term Yield Index).

~~Unrealized~~Changes in unrealized credit loss provision for the three months ended June 30, ~~2022 decreased immaterially~~2023 compared to the three months ended June 30, ~~2021. Unrealized credit loss provision for~~2022 were primarily the ~~six months ended June 30, 2022 increased $0.6 million compared~~result of increases in notes receivable balances from real estate financing investments, partially offset by the release of the allowance attributable to the ~~six months ended June 30, 2021 primarily due to~~mezzanine loan redeemed in connection with the ~~addition~~acquisition of ~~the City Park 2 preferred equity investment and increased funding on the Harbor Point Parcel 3 loan.~~The Interlock.

Other income (expense), net for the three ~~and~~months ended June 30, 2023 increased compared to the three months ended June 30, 2022. The increase was immaterial. Other income (expense), net for the six months ended June 30, ~~2022 was materially consistent with~~2023 decreased compared to the ~~three and~~ six months ended June 30, ~~2021.~~2022. The decrease was immaterial.

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The income tax provision and benefits that we recognized during the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were attributable to the taxable profits and losses of our development and construction businesses that we 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, borrowings available under our credit facility, and net proceeds from the opportunistic sale of common stock through our 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. We expect to meet our long-term liquidity requirements with net cash from operations, long-term secured and unsecured indebtedness, the issuance of equity and debt securities, and the opportunistic disposition of non-core properties. We also may fund property development and acquisitions and capital improvements using our credit facility pending long-term financing.

As of June 30, ~~2022,~~2023, we had unrestricted cash and cash equivalents of ~~$69.7~~$34.1 million available for both current liquidity needs as well as development and redevelopment activities. We also had restricted cash in escrow of ~~$6.7~~$2.0 million, some of which is available for capital expenditures and certain operating expenses at our operating properties. As of June 30, ~~2022,~~2023, we had ~~$68.0~~$96.0 million of available borrowings under our revolving credit facility to meet our short-term liquidity requirements and ~~$33.3~~$67.3 million of available borrowings under our construction loans to fund development activities. During the three months ended June 30, 2023, we increased outstanding borrowings on our revolving credit facility by $49.0 million, which were largely used to fund our acquisition of The Interlock and our investments in the Southern Post and Harbor Point Parcel 4 mixed-use development projects.

~~The Marketplace at Hilltop loan has an outstanding principal balance~~During the year ended December 31, 2022, we began to implement a strategic transformation of ~~$9.5 million and is scheduled~~the composition of borrowings by refinancing secured property debt with unsecured property debt in order to ~~mature~~increase the flexibility of our financing cash flows. We continue to implement this transformation in ~~October~~the current year fiscal year. As of June 30, 2023, unsecured debt represented 51.1% of our total borrowings compared to 24.6% as of June 30, 2022.

We have no ~~other~~ loans scheduled to mature during the remainder of ~~2022.~~2023.

ATM Program

On March 10, 2020, we commenced an 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.

During the six months ended June 30, 2022, we issued and sold 475,074 shares of common stock at a weighted average price of $15.21 per share under the ATM Program, receiving net proceeds, after offering costs and commissions, of $7.1 million. During the six months ended June 30, 2022,2023, we did not issue any shares of common stock or Series A Preferred Stock under the ATM Program. Shares having an aggregate offering price of $205.0 million remained unsold under the ATM Program as of August 4, ~~2022.~~2023.

Share Repurchase Program

On June 15, 2023, we adopted a $50.0 million share repurchase program (the "Share Repurchase Program"). Under the Share Repurchase Program, we may repurchase shares of our common stock and Series A Preferred Stock from time to time in the open market, in block purchases, through privately negotiated transactions, the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or other means permitted. The Share Repurchase Program does not obligate us to acquire any specific number of shares or acquire shares over any specific period of time. The Share Repurchase Program may be suspended or discontinued at any time by us and does not have

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~~Common Stock Issuance~~

~~On January 11, 2022,~~an expiration date. During the six months ended June 30, 2023, we ~~completed an underwritten public offering of 4,025,000~~did not repurchase any shares of common stock ~~which were pre-purchased from us by~~or Series A Preferred Stock. As of June 30, 2023, $50.0 million remained available for repurchases under the ~~underwriter at a purchase price of $14.45 per share including fees, resulting in net proceeds after offering costs of $58.0 million.~~Share Repurchase Program.

Credit Facility

~~We have a senior credit facility that was~~On August 23, 2022, we entered into an amended and restated ~~on October 3, 2019. The total commitments are $355.0~~credit agreement (the "Credit Agreement"), which provides for a $550.0 million credit facility comprised of a ~~$150.0~~$250.0 million senior unsecured revolving credit facility (the "revolving credit facility") and a ~~$205.0~~$300.0 million senior unsecured term loan facility (the "term loan facility" and, together with the revolving credit facility, the "credit facility"), with a syndicate of banks. Subject to available borrowing capacity, we intend to use future borrowings under the credit facility for general corporate purposes, including funding acquisitions, mezzanine lending, and development and redevelopment of properties in our portfolio, and for working capital. Our unencumbered borrowing pool will support revolving borrowings of up to $150 million as of June 30, 2022. In July 2022, we repaid $31.0 million, net of borrowings, under the revolving credit facility.

The credit facility includes an accordion feature that allows the total commitments to be increased to ~~$700.0 million,~~$1.0 billion, subject to certain conditions, including obtaining commitments from any one or more lenders. The revolving credit facility has a scheduled maturity date of January ~~24, 2024,~~22, 2027, 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 January ~~24, 2025.~~21, 2028.

The revolving credit facility bears interest at ~~LIBOR~~SOFR plus a margin ranging from 1.30% to 1.85% and a credit spread adjustment of 0.10%, and the term loan facility bears interest at ~~LIBOR~~SOFR plus a margin ranging from 1.25% to 1.80% and a credit spread adjustment of 0.10%, in each case depending on our total leverage. We also are ~~also~~ obligated to pay an unused commitment fee of ~~0.15%~~15 or ~~0.25%~~25 basis points on the unused portions of the commitments under the revolving credit facility, depending on the amount of borrowings under the revolving credit facility. If ~~we attain~~the Company or the Operating Partnership attains investment grade credit ratings from ~~Standard~~both S&P Global Ratings and ~~Poor's or Moody's Investor~~Moody’s Investors Service, Inc., we may elect to have borrowings become subject to interest rates based on ~~our~~such credit ratings. AsOur unencumbered borrowing pool will support revolving borrowings of ~~December 31, 2021, LIBOR is phasing out and we are transitioning~~up to ~~alternative reference rates, such~~$250.0 million, as ~~the Secured Overnight Financing Rate ("SOFR") and BSBY.~~of June 30, 2023.

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

The ~~credit agreement~~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~~total leverage ratio of not more than 60% (or 65% for the two consecutive quarters following any acquisition with a purchase price of at least ~~up to~~ $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)~~Credit Agreement) to fixed charges of not less than 1.50 to 1.0;

•Tangible net worth of not less than the sum of ~~$567,106,000~~(i) $825.2 million and (ii) an amount equal to 75% of the net equity proceeds received by us after June 30, ~~2019;~~2022;

•Ratio of secured indebtedness (excluding the credit facility if it becomes secured indebtedness) to total asset value of not more than 40%;

•Ratio of secured recourse debt (excluding the credit facility if it becomes secured indebtedness) 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 with a purchase price of at least ~~up to~~ $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)~~Credit Agreement) of not less than 1.75 to 1.0;

•Maintenance of a minimum of at least 15 unencumbered properties (as defined in the ~~credit agreement)~~Credit Agreement) with an unencumbered asset value (as defined in the ~~credit agreement)~~Credit Agreement) of not less than ~~$300.0~~$500.0 million at any time; and

•Minimum occupancy rate (as defined in the ~~credit agreement)~~Credit Agreement) for all unencumbered properties of not less than 80% at any ~~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).~~time.

The ~~credit agreement~~Credit Agreement limits our ability to pay cash ~~dividends.~~dividends if a default has occurred and is continuing or would result therefrom. 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 Internal Revenue Code of 1986, as amended.

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Ifif certain defaults or events of default exist, we may pay cash dividends ~~with respect to any 12-month period~~ to the extent necessary to (i) maintain our status as a ~~REIT.~~REIT and (ii) avoid federal or state income excise taxes. The ~~credit agreement~~Credit Agreement 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~~our ability to repurchase stock and ~~Operating Partnership units that we may repurchase~~OP Units 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 significant premium or penalty, except for those portions subject to an interest rate swap agreement.

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The ~~credit agreement~~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 ~~governing~~under the Credit Agreement.

M&T Term Loan Facility

On December 6, 2022, we entered into a term loan agreement (the "M&T term loan agreement") with Manufacturers and Traders Trust Company, which provides a $100.0 million senior unsecured term loan facility (the "M&T term loan facility"), with the option to increase the total capacity to $200.0 million, subject to our satisfaction of certain conditions. The M&T term loan facility has a scheduled maturity date of March 8, 2027, with a one-year extension option, subject to our satisfaction of certain conditions, including payment of a 0.075% extension fee.

The M&T term loan facility bears interest at a rate elected by us based on term SOFR, Daily Simple SOFR, or the Base Rate (as defined below), and in each case plus a margin. A term SOFR or Daily Simple SOFR loan is also subject to a credit ~~agreement.~~spread adjustment of 0.10%. The margin under each interest rate election depends on our total leverage. The "Base Rate" is equal to the highest of: (a) the rate of interest in effect for such day as publicly announced from time to time by M&T Bank as its “prime rate” for such day, (b) the Federal Funds Rate for such day, plus 0.50%, (c) one month term SOFR for such day plus 100 basis points and (d) 1.00%. We have elected for the loan to bear interest at term SOFR plus margin. If we attain investment grade credit ratings from both S&P Global Ratings and Moody's Investor Service, Inc., we may elect to have borrowings become subject to interest rates based on such credit ratings.

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

The M&T term loan agreement contains customary representations and warranties and financial and other affirmative and negative covenants. Our ability to borrow under the M&T term loan facility is subject to 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 with a purchase price of at least $100.0 million, but only up to two times during the term of the M&T term loan facility);

•Ratio of adjusted EBITDA (as defined in the M&T term loan agreement) to fixed charges of not less than 1.50 to 1.0;

•Tangible net worth of not less than the sum of (i) $825.2 million and (ii) an amount equal to 75% of the net equity proceeds received by us after June 30, 2022;

•Ratio of secured indebtedness (excluding the M&T term loan facility if it becomes secured indebtedness) to total asset value of not more than 40%;

•Ratio of secured recourse debt (excluding the M&T term loan facility if it becomes secured indebtedness) 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 with a purchase price of at least $100.0 million, but only up to two times during the term of the M&T term loan facility);

•Unencumbered interest coverage ratio (as defined in the M&T term loan agreement) of not less than 1.75 to 1.0;

•Maintenance of a minimum of at least 15 unencumbered properties (as defined in the M&T term loan agreement) with an unencumbered asset value (as defined in the M&T term loan agreement) of not less than $500.0 million at any time; and

•Minimum occupancy rate (as defined in the M&T term loan agreement) for all unencumbered properties of not less than 80% at any time.

The M&T term loan agreement limits our ability to pay cash dividends if a default has occurred and is continuing or would result therefrom. However, if certain defaults or events of default exist, we may pay cash dividends to the extent necessary to (i) maintain our status as a REIT and (ii) avoid federal or state income excise taxes. The M&T term loan agreement 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 our ability to repurchase stock and OP Units during the term of the M&T term loan facility.

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We may, at any time, voluntarily prepay the M&T term loan facility in whole or in part without premium or penalty, provided certain conditions are met.

The M&T term loan 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 M&T term loan facility to be immediately due and payable. A default under the Credit Agreement would also constitute a default under the M&T term loan agreement.

We are currently in compliance with all covenants under the M&T term loan agreement.

TD Term Loan Facility

On May 19, 2023, we entered into a term loan agreement (the "TD term loan agreement") with Toronto Dominion (Texas) LLC, as administrative agent, and TD Bank, N.A. as lender, which provides a $75.0 million senior unsecured term loan facility (the "TD term loan facility"), with the option to increase the total capacity to $150.0 million, subject to our satisfaction of certain conditions. The TD term loan facility has a scheduled maturity date of May 19, 2025, with a one-year extension option, subject to our satisfaction of certain conditions, including an extension fee payment of 0.15% of the outstanding amount of the loan as of such date.

The TD term loan facility bears interest at a rate elected by us based on term SOFR, Daily Simple SOFR, or the Base Rate (as defined below), and in each case plus a margin. A term SOFR or Daily Simple SOFR loan is also subject to a credit spread adjustment of 0.10%. The margin under each interest rate election depends on our total leverage. The "Base Rate" is equal to the highest of: (a) the Federal Funds Rate for such day, plus 0.50% (b) the rate of interest in effect for such day as publicly announced from time to time by the administrative agent as its “prime rate” for such day, (c) one month term SOFR for such day plus 100 basis points and (d) 1.00%. We have elected for the loan to bear interest at term SOFR plus margin. If we attain investment grade credit ratings from both S&P Global Ratings and Moody's Investor Service, Inc., we may elect to have borrowings become subject to interest rates based on such credit ratings.

On June 29, 2023, the TD term loan facility commitment increased to $95.0 million as a result of the addition of a second lender to the facility.

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

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

•Ratio of adjusted EBITDA (as defined in the TD term loan agreement) to fixed charges of not less than 1.50 to 1.0;

•Tangible net worth of not less than the sum of (i) $825.2 million and (ii) an amount equal to 75% of the net equity proceeds received by us after June 30, 2022;

•Ratio of secured indebtedness (excluding the TD term loan facility if it becomes secured indebtedness) to total asset value of not more than 40%;

•Ratio of secured recourse debt (excluding the TD term loan facility if it becomes secured indebtedness) to total asset value of not more than 20%;

•Unencumbered interest coverage ratio (as defined in the TD term loan agreement) of not less than 1.75 to 1.0;

•Maintenance of a minimum of at least 15 unencumbered properties (as defined in the TD term loan agreement) with an unencumbered asset value (as defined in the TD term loan agreement) of not less than $500.0 million at any time; and

•Minimum occupancy rate (as defined in the TD term loan agreement) for all unencumbered properties of not less than 80% at any time.

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The TD term loan agreement limits our ability to pay cash dividends if a default has occurred and is continuing or would result therefrom. However, if certain defaults or events of default exist, we may pay cash dividends to the extent necessary to (i) maintain our status as a REIT and (ii) avoid federal or state income excise taxes. The TD term loan agreement 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 our ability to repurchase stock and OP Units during the term of the TD term loan facility.

We may, at any time, voluntarily prepay the TD term loan facility in whole or in part without premium or penalty, provided certain conditions are met.

The TD term loan 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 TD term loan facility to be immediately due and payable. A default under the Credit Agreement would also constitute a default under the TD term loan agreement.

We are currently in compliance with all covenants under the TD term loan agreement.

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Consolidated Indebtedness

The following table sets forth our consolidated indebtedness as of June 30, ~~2022~~2023 ($ in thousands):

Amount Outstanding
Interest Rate (a)
Effective Rate for Variable Debt Maturity Date Balance at Maturity
   Secured Debt
Marketplace at Hilltop $ 9,492 4.42 % October 1, 2022 $ 9,383
1405 Point 51,914 LIBOR+ 2.25 % 4.04 % January 1, 2023 51,532
Wills Wharf 64,288 LIBOR+ 2.25 % 4.04 % June 26, 2023 64,288
249 Central Park Retail(b)
16,226 LIBOR+ 1.60 % 3.85 % (c) August 10, 2023 15,935
Fountain Plaza Retail(b)
9,765 LIBOR+ 1.60 % 3.85 % (c) August 10, 2023 9,589
South Retail(b)
7,124 LIBOR+ 1.60 % 3.85 % (c) August 10, 2023 6,996
One City Center 23,760 LIBOR+ 1.85 % 3.64 % April 1, 2024 22,559
Chronicle Mill 14,640 LIBOR+ 3.00 % 4.79 % May 5, 2024 14,640
Red Mill Central 2,100 4.80 % June 17, 2024 1,765
Gainesville Apartments 30,328 LIBOR+ 3.00 % 4.79 % August 31, 2024 30,327
Premier Apartments(d)
16,399 LIBOR+ 1.55 % 3.34 % October 31, 2024 15,848
Premier Retail(d)
8,077 LIBOR+ 1.55 % 3.34 % October 31, 2024 7,806
Red Mill South 5,356 3.57 % May 1, 2025 4,383
Brooks Crossing Office 14,631 LIBOR+ 1.60% 3.39 % July 1, 2025 13,798
Market at Mill Creek 12,818 LIBOR+ 1.55% 3.34 % July 12, 2025 10,876
Encore Apartments(e)
24,253 2.93 % February 10, 2026 22,213
4525 Main Street(e)
31,133 2.93 % February 10, 2026 28,514
Thames Street Wharf 70,044 BSBY+ 1.30 % 2.35 % (c) September 30, 2026 60,839
Exelon Building 175,000 BSBY+ 1.50 % 1.00 % (f) November 1, 2026 175,000
Southgate Square 26,656 LIBOR+ 1.90 % 3.69 % December 21, 2026 24,741
Nexton Square 22,500 SOFR+ 1.95 % 3.45 % June 30, 2027 19,453
Greenbrier Square 20,000 3.74% October 10, 2027 18,049
Lexington Square 14,034 4.50 % September 1, 2028 12,044
Red Mill North 4,135 4.73 % December 31, 2028 3,295
Greenside Apartments 32,232 3.17 % December 15, 2029 26,095
The Residences at Annapolis Junction(g)
84,375 SOFR+ 2.66 % 4.16 % (f) November 1, 2030 71,183
Smith's Landing 15,997 4.05 % June 1, 2035 384
Liberty Apartments 13,414 5.66 % November 1, 2043 90
Edison Apartments 15,747 5.30 % December 1, 2044 100
The Cosmopolitan 41,670 3.35 % July 1, 2051 187
Total secured debt $ 878,108 $ 741,912
   Unsecured debt
Senior unsecured revolving credit facility $ 82,000 LIBOR+ 1.30%-1.85% 3.29 % January 24, 2024 $ 82,000
Senior unsecured term loan 19,500 LIBOR+ 1.25%-1.80% 3.24 % January 24, 2025 19,500
Senior unsecured term loan 185,500 LIBOR+ 1.25%-1.80% 1.95%-4.47% (c) January 24, 2025 185,500
Total unsecured debt 287,000 287,000
   Total principal balances $ 1,165,108

$ 1,028,912
Other notes payable(h)
9,204
Unamortized GAAP adjustments (9,599)
Loans reclassified to liabilities related to assets held for sale, net (84,049)
   Indebtedness, net $ 1,080,664
~~_______________________________________~~


	Amount Outstanding		Interest Rate (a)			Effective Rate for Variable-Rate Debt			Maturity Date	Balance at Maturity
Secured Debt
Chronicle Mill(b)	$	34,167	LIBOR+	3.00	%	6.14	%		May 5, 2024	$	34,167
Red Mill Central	1,925			4.80	%				June 17, 2024	1,765
Premier Apartments(c)	16,153		SOFR+	1.55	%	6.81	%		October 31, 2024	15,830
Premier Retail(c)	7,955		SOFR+	1.55	%	6.81	%		October 31, 2024	7,797
Red Mill South	5,024			3.57	%				May 1, 2025	4,383
Market at Mill Creek(b)	11,671		LIBOR+	1.55%		6.77	%		July 12, 2025	10,376
The Everly	30,000		SOFR+	1.50	%	6.64	%		December 20, 2025	30,000
Encore Apartments(d)	23,704			2.93	%				February 10, 2026	22,211
4525 Main Street(d)	30,432			2.93	%				February 10, 2026	28,515
Southern Post	7,286		SOFR+	2.25	%	5.39	%		August 25, 2026	7,286
Thames Street Wharf	68,611		SOFR+	1.30	%	2.33	%	(e)	September 30, 2026	60,839
Constellation Energy Building	175,000		SOFR+	1.50	%	3.46	%	(e)	November 1, 2026	175,000
Southgate Square	25,763		SOFR+	1.90	%	7.14	%		December 21, 2026	22,811
Nexton Square	21,887		SOFR+	1.95	%	7.09	%		June 30, 2027	19,487
Liberty Apartments	20,758		SOFR+	1.50	%	6.64	%		September 27, 2027	19,230
Greenbrier Square	19,756			3.74%					October 10, 2027	18,049
Lexington Square	13,747			4.50	%				September 1, 2028	12,044
Red Mill North	4,021			4.73	%				December 31, 2028	3,295
Greenside Apartments	31,484			3.17	%				December 15, 2029	26,095
Smith's Landing	15,060			4.05	%				June 1, 2035	384
The Edison	15,373			5.30	%				December 1, 2044	100
The Cosmopolitan	40,809			3.35	%				July 1, 2051	187
Total secured debt	$	620,586								$	519,851
Unsecured debt
TD unsecured term loan	$	95,000	SOFR+	1.35%-1.90%		4.70	%	(e)	May 19, 2025	$	95,000
Senior unsecured revolving credit facility	149,000		SOFR+	1.30%-1.85%		6.64	%		January 22, 2027	149,000
Senior unsecured revolving credit facility (fixed)	5,000		SOFR+	1.30%-1.85%		4.70	%	(e)	January 22, 2027	5,000
M&T unsecured term loan	100,000		SOFR+	1.25%-1.80%		4.90	%	(e)	March 8, 2027	100,000
Senior unsecured term loan	81,931		SOFR+	1.25%-1.80%		6.54	%		January 21, 2028	81,931
Senior unsecured term loan (fixed)	218,069		SOFR+	1.25%-1.80%		1.73%-4.83%		(e)	January 21, 2028	218,069
Total unsecured debt	649,000									649,000
Total principal balances	$	1,269,586								$	1,168,851
Other notes payable(f)	6,128
Unamortized GAAP adjustments	(11,071)

Indebtedness, net	$	1,264,643

(a) LIBOR ~~SOFR,~~ and ~~BSBY~~SOFR are determined by individual lenders.

(b) These debt instruments began bearing interest at SOFR+ in July 2023.

~~(c)~~(d) Cross collateralized.

(e) Includes debt subject to interest rate swap locks.

~~(d) Cross collateralized.~~

~~(e) Cross collateralized.~~

(f) ~~Includes debt subject to designated interest rate caps.~~

~~(g) Secured by real estate held for sale as of June 30, 2022. On July 22, 2022, we sold the property securing this loan and repaid the loan in full.~~

~~(h)~~ Represents the fair value of additional ground lease payments at 1405 Point over the approximately ~~42-year~~40-year remaining lease ~~term and an~~term.

As of June 30, 2023, we are in compliance with all loan covenants on our outstanding indebtedness.

3842

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~~earn-out liability for the Gainesville development project.~~

As of June 30, ~~2022, we are in compliance with all loan covenants on~~2023, our outstanding indebtedness. The lease-up requirement previously stipulated by the syndicated loan secured by Wills Wharf was satisfied as a result of a new lease executed during the three months ended June 30, 2022. As a result, the $4.3 million of cash previously restricted on this property has been unrestricted.

~~As of June 30, 2022, our~~scheduled principal payments and maturities during each of the ~~following~~next five years and thereafter are as follows ($ in thousands):


Year~~(1)~~(2)	Year~~(1)~~(2)	Amount Due		Percentage of Total		Year~~(1)~~(2)	Amount Due		Percentage of Total
2022 (excluding six months ended June 30, 2022)		$	15,043	1	%
2023		159,084		14	%
2023 (excluding six months ended June 30, 2023)						2023 (excluding six months ended June 30, 2023)	$	4,908	*
2024	2024	187,106		16	%	2024	69,936		5	%
2025	2025	246,368		21	%	2025	150,495		12	%
2026	2026	321,012		28	%	2026	324,813		26	%
2027						2027	315,566		25	%
Thereafter	Thereafter	236,495		20	%	Thereafter	403,868		32	%
Total	Total	$	1,165,108	100	%	Total	$	1,269,586	100	%

(1) Does not reflect the effect of any maturity extension options.

(2) Includes debt incurred in connection with the development of properties.

* Less than one percent

Interest Rate Derivatives

As of June 30, ~~2022,~~2023, we were party to the following ~~LIBOR (to be transitioned to~~ SOFR ~~and BSBY), SOFR, and BSBY~~ interest rate cap agreements ($ in thousands):

~~Effective Date~~

~~Maturity Date~~

~~Strike Rate~~

~~Notional Amount~~

~~7/1/2020~~

~~7/1/2023~~

~~0.50% (LIBOR)~~

~~(a)~~

~~100,000~~

~~11/1/2020~~

~~11/1/2023~~

~~1.84% (SOFR)~~

~~84,375~~

~~2/2/2021~~

~~2/1/2023~~

~~0.50% (LIBOR)~~

~~100,000~~

~~3/4/2021~~

~~4/1/2023~~

~~2.50% (LIBOR)~~

~~14,479~~

~~5/5/2021~~

~~5/1/2023~~

~~0.50% (LIBOR)~~

~~(a)~~

~~50,000~~

~~5/5/2021~~

~~5/1/2023~~

~~0.50% (LIBOR)~~

~~(a)~~

~~35,100~~

~~6/16/2021~~

~~7/1/2023~~

~~0.50% (LIBOR)~~

~~(a)~~

~~100,000~~

~~1/11/2022~~

~~2/1/2024~~

~~4.00% (BSBY)~~

~~175,000~~

~~4/7/2022~~

~~2/1/2024~~

~~1.00%-3.00% (BSBY)~~

~~(b)~~

~~175,000~~

~~9/1/2022~~

~~9/1/2024~~

~~1.00%-3.00% (SOFR)~~

~~(b)(c)~~

~~73,562~~

~~Total~~

~~907,516~~

Effective Date

Maturity Date

Strike Rate

Notional Amount

11/1/2020

11/1/2023

1.84

84,375

7/1/2022

1/1/2024

1.00%-3.00%

(a)

50,000

(b)

7/5/2022

1/1/2024

1.00%-3.00%

(a)

35,100

7/6/2022

3/1/2024

1.00%-3.00%

(a)

200,000

(b)

9/1/2022

9/1/2024

1.00%-3.00%

(a)

46,490

(c)

Total

415,965

(a) Subsequent to June 30, 2022, we modified and extended these interest rate caps. See Note 15 to our condensed consolidated financial statements in Item 1 of this Quarterly Report on Form 10-Q for additional information regarding these transactions.

~~(b)~~ We purchased interest rate caps at 1.00% and sold interest rate caps at 3.00%, resulting in interest rate cap corridors of 1.00% and 3.00%. The intended goal of these corridors is to provide a level of protection from the effect of rising interest rates and reduce the all-in cost of the derivative instrument.

~~(c) We purchased this~~(b) Subsequent to June 30, 2023, these interest rate ~~cap corridor during~~caps were terminated and replaced with floating-to-fixed interest rate swaps.

(c)Represents the ~~three months ended~~notional amount as of June 30, ~~2022 with an effective date of September 1, 2022.~~2023. The ~~notional amount represents the maximum notional amount that will eventually be in effect. The~~

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notional amount is scheduled to increase over the term of the corridor in accordance with projected borrowings on the associated loan. The maximum notional amount that will eventually be in effect is $73.6 million.

As of June 30, ~~2022,~~2023, we held the following interest rate swap agreements ($ in thousands):


Related Debt	Related Debt	Notional Amount		Index	Swap Fixed Rate		Debt effective rate		Effective Date	Expiration Date	Related Debt	Notional Amount		Index		Swap Fixed Rate		Debt effective rate		Effective Date	Expiration Date
Senior unsecured term loan	Senior unsecured term loan	$	50,000	1-month LIBOR	2.26	%	3.71	%	4/1/2019	10/26/2022	Senior unsecured term loan	$	32,569	1-month SOFR	(a)	2.17	%	3.57	%	4/1/2019	8/10/2023
Senior unsecured term loan	Senior unsecured term loan	50,000		1-month LIBOR	2.78	%	4.23	%	5/1/2018	5/1/2023	Senior unsecured term loan	10,500		1-month SOFR	(a)	2.94	%	4.34	%	10/12/2018	10/12/2023
249 Central Park Retail, South Retail, and Fountain Plaza Retail		33,115		1-month LIBOR	2.25	%	3.85	%	4/1/2019	8/10/2023
Constellation Energy Building											Constellation Energy Building	175,000		1-month SOFR	(b)	1.84	%	3.46	%	4/1/2023	2/1/2024
Senior unsecured term loan	Senior unsecured term loan	10,500		1-month LIBOR	3.02	%	4.47	%	10/12/2018	10/12/2023	Senior unsecured term loan	25,000		1-month SOFR	(a)	0.42	%	1.82	%	4/1/2020	4/1/2024
Senior unsecured term loan	Senior unsecured term loan	25,000		1-month LIBOR	0.50	%	1.95	%	4/1/2020	4/1/2024	Senior unsecured term loan	25,000		1-month SOFR	(a)	0.33	%	1.73	%	4/1/2020	4/1/2024
Senior unsecured term loan	Senior unsecured term loan	25,000		1-month LIBOR	0.50	%	1.95	%	4/1/2020	4/1/2024	Senior unsecured term loan	25,000		Daily SOFR	(a)	0.44	%	1.84	%	4/1/2020	4/1/2024
Revolving credit facility and TD unsecured term loan											Revolving credit facility and TD unsecured term loan	100,000		Daily SOFR		3.20	%	4.70	%	5/19/2023	5/19/2026	(c)
Thames Street Wharf											Thames Street Wharf	68,611		Daily SOFR	(a)	0.93	%	2.33	%	9/30/2021	9/30/2026
M&T unsecured term loan											M&T unsecured term loan	100,000		1-month SOFR		3.50	%	4.90	%	12/6/2022	12/6/2027
Senior unsecured term loan	Senior unsecured term loan	25,000		1-month LIBOR	0.55	%	2.00	%	4/1/2020	4/1/2024	Senior unsecured term loan	100,000		1-month SOFR		3.43	%	4.83	%	12/13/2022	1/21/2028
Thames Street Wharf		70,044		1-month BSBY	1.05	%	2.35	%	9/30/2021	9/30/2026
Total	Total	$	288,659								Total	$	661,680

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(a) Transitioned to SOFR during the six months ended June 30, 2023.

(b) Effective April 4, 2023, we terminated our 4.00% BSBY interest rate cap with a notional amount of $175.0 million and our BSBY corridor of 1.00%-3.00% with a notional amount of $175.0 million and, effective April 3, 2023, entered into this interest rate swap agreement. We paid a net zero premium for this transaction.

Off-Balance Sheet Arrangements

In connection with certain of our ~~mezzanine lending~~real estate financing activities and equity method investments, we have made guarantees to pay portions of certain senior loans of third parties associated with the development projects. ~~The following table summarizes the guarantees made by us as of June 30, 2022 (in thousands):~~

Development project Payment guarantee amount Guarantee liability
Interlock Commercial $ 37,450 $ 1,346
Harbor Point Parcel 4 (a)
32,910 242
Total $ 70,360 $ 1,588

~~(a)~~ As of June 30, ~~2022,~~2023, we had an outstanding guarantee liability of $0.2 million related to the $32.9 million senior loan on the Harbor Point Parcel 4. As of June 30, 2023, no amounts have been funded on this senior loan.

In connection with our Harbor Point Parcel 3 unconsolidated joint venture, we are responsible for providing a completion guarantee to the lender for this project.

Unfunded Loan Commitments

We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our borrowers. These commitments are not reflected on the consolidated balance sheet. As of June 30, ~~2022,~~2023, our off-balance sheet arrangements consisted of ~~$19.3~~$35.0 million of unfunded commitments of our notes receivable. We have recorded a ~~$0.5~~$0.6 million credit loss reserve in conjunction with the total unfunded commitments. Such commitments are subject to our borrowers’ satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets. The commitments may or may not be funded depending on a variety of circumstances including timing, credit metric hurdles, and other nonfinancial events occurring.

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Cash Flows


		Six Months Ended June 30,							Six Months Ended June 30,
		2022		2021		Change			2023		2022		Change
		(in thousands)							(in thousands)
Operating Activities	Operating Activities	$	50,407	$	40,640	$	9,767	Operating Activities	$	40,461	$	50,407	$	(9,946)
Investing Activities	Investing Activities	(86,950)		(31,605)		(55,345)		Investing Activities	(103,240)		(86,950)		(16,290)
Financing Activities	Financing Activities	72,512		(6,223)		78,735		Financing Activities	47,011		72,512		(25,501)
Net Increase (decrease)	Net Increase (decrease)	$	35,969	$	2,812	$	33,157	Net Increase (decrease)	$	(15,768)	$	35,969	$	(51,737)
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period	Cash, Cash Equivalents, and Restricted Cash, Beginning of Period	$	40,443	$	50,430			Cash, Cash Equivalents, and Restricted Cash, Beginning of Period	$	51,865	$	40,443
Cash, Cash Equivalents, and Restricted Cash, End of Period	Cash, Cash Equivalents, and Restricted Cash, End of Period	$	76,412	$	53,242			Cash, Cash Equivalents, and Restricted Cash, End of Period	$	36,097	$	76,412

Net cash provided by operating activities during the six months ended June 30, ~~2022 increased $9.8~~2023 decreased $9.9 million compared to the six months ended June 30, ~~2021~~2022 primarily as a result of increased costs and timing differences ~~in operating assets and liabilities, as well as increased net operating income from the property portfolio.~~within construction working capital.

During the six months ended June 30, ~~2022,~~2023, net cash used in investing activities increased ~~$55.3~~$16.3 million compared to the six months ended June 30, ~~2021~~2022 primarily ~~due to~~because of $8.4 million net cash used for the acquisition of ~~the Exelon Building, increased development activity, decreased paydowns of mezzanine loans, and increased contributions~~The Interlock in 2023 compared to ~~equity method investments. The increase was partially offset by increased disposition activity.~~$8.5 million net cash proceeds from dispositions in 2022.

During the six months ended June 30, ~~2022,~~2023, net cash provided by financing activities ~~increased $78.7~~decreased $25.5 million compared to the six months ended June 30, ~~2021~~2022 primarily due to ~~an increase~~decreases in the net proceeds ~~from~~of equity issuances ~~and~~partially offset against higher net ~~issuances of~~ debt ~~which was partially offset by increased dividends and distributions paid.~~issuances.

Non-GAAP Financial Measures

We calculate FFO in accordance with the standards established by the 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~~related to real estate, gains or losses from the sales of ~~deferred financing costs),~~certain real estate assets, gains or losses from change in

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control, and impairment write-downs of certain real estate assets and ~~after adjustments for unconsolidated partnerships and joint ventures.~~investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because we 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,~~period-over-period, 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 Nareit definition as we do, and, accordingly, our calculation of FFO may not be comparable to such other REITs’ calculations 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 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’s definition includes certain items that are not indicative of the results provided by our operating property portfolio and affect the comparability of our ~~year-over-year~~period-over-period 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 and accelerated amortization of intangible assets and liabilities, property acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives not designated as cash flow hedges, ~~certain costs for~~amortization of payments made to purchase interest rate caps designated as cash flow hedges, provision for

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unrealized non-cash credit losses, amortization of right-of-use assets attributable to finance leases, severance related costs, and other non-comparable items. Other equity REITs may not calculate Normalized FFO in the same manner as we do, and, accordingly, our Normalized FFO may not be comparable to such other REITs' Normalized FFO.

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The following table sets forth a reconciliation of FFO and Normalized FFO for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 to net income, the most directly comparable GAAP measure:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in thousands, except per share and unit amounts)									(in thousands, except per share and unit amounts)
Net income attributable to common stockholders and OP Unitholders	Net income attributable to common stockholders and OP Unitholders	$	27,752	$	5,568	$	37,041	$	8,690	Net income attributable to common stockholders and OP Unitholders	$	11,729	$	27,752	$	14,105	$	37,041
Depreciation and amortization (1)	Depreciation and amortization (1)	18,509		17,285		36,794		35,351		Depreciation and amortization (1)	19,655		18,509		37,900		36,794
Gain on operating real estate dispositions, net (2)	Gain on operating real estate dispositions, net (2)	(19,493)		—		(19,493)		(3,464)		Gain on operating real estate dispositions, net (2)	—		(19,493)		—		(19,493)
Impairment of real estate assets	Impairment of real estate assets	201		—		201		3,039		Impairment of real estate assets	—		201		—		201
FFO attributable to common stockholders and OP Unitholders	FFO attributable to common stockholders and OP Unitholders	26,969		22,853		54,543		43,616		FFO attributable to common stockholders and OP Unitholders	31,384		26,969		52,005		54,543
Acquisition, development and other pursuit costs	Acquisition, development and other pursuit costs	26		32		37		103		Acquisition, development and other pursuit costs	18		26		18		37
Impairment of intangible assets and liabilities		85		83		132		83
Accelerated amortization of intangible assets and liabilities										Accelerated amortization of intangible assets and liabilities	(722)		85		(620)		132
Loss on extinguishment of debt	Loss on extinguishment of debt	618		—		776		—		Loss on extinguishment of debt	—		618		—		776
Unrealized credit loss provision	Unrealized credit loss provision	295		388		900		333		Unrealized credit loss provision	100		295		177		900
Amortization of right-of-use assets - finance leases	Amortization of right-of-use assets - finance leases	277		278		555		467		Amortization of right-of-use assets - finance leases	347		277		624		555
Change in fair value of derivatives not designated as cash flow hedges and other		(2,548)		(314)		(6,730)		(707)
Amortization of interest rate cap premiums on designated cash flow hedges		481		59		523		117
Decrease (Increase) in fair value of derivatives not designated as cash flow hedges										Decrease (Increase) in fair value of derivatives not designated as cash flow hedges	(4,297)		(2,548)		(490)		(6,730)
Amortization of interest rate derivatives on designated cash flow hedges										Amortization of interest rate derivatives on designated cash flow hedges	1,471		481		3,085		523

Normalized FFO available to common stockholders and OP Unitholders	Normalized FFO available to common stockholders and OP Unitholders	$	26,203	$	23,379	$	50,736	$	44,012	Normalized FFO available to common stockholders and OP Unitholders	$	28,301	$	26,203	$	54,799	$	50,736
Net income attributable to common stockholders and OP Unitholders per diluted share and unit	Net income attributable to common stockholders and OP Unitholders per diluted share and unit	$	0.31	$	0.07	$	0.42	$	0.11	Net income attributable to common stockholders and OP Unitholders per diluted share and unit	$	0.13	$	0.31	$	0.16	$	0.42
FFO attributable to common stockholders and OP Unitholders per diluted share and unit	FFO attributable to common stockholders and OP Unitholders per diluted share and unit	$	0.31	$	0.28	$	0.62	$	0.54	FFO attributable to common stockholders and OP Unitholders per diluted share and unit	$	0.35	$	0.31	$	0.59	$	0.62
Normalized FFO attributable to common stockholders and OP Unitholders per diluted share and unit	Normalized FFO attributable to common stockholders and OP Unitholders per diluted share and unit	$	0.30	$	0.29	$	0.58	$	0.54	Normalized FFO attributable to common stockholders and OP Unitholders per diluted share and unit	$	0.32	$	0.30	$	0.62	$	0.58
Weighted average common shares and units - diluted	Weighted average common shares and units - diluted	88,331		81,262		88,042		80,771		Weighted average common shares and units - diluted	88,724		88,331		88,562		88,042


(1) The adjustment for depreciation and amortization for the three and six months ended June 30, 2023 exclude $0.2 million and $0.4 million, respectively, of depreciation attributable to our joint venture partners. The adjustment for depreciation and amortization for the three and six months ended June 30, 2022 excludes $0.3 million and $0.5 million, respectively, of depreciation attributable to our joint venture partners.
(2) The adjustment for gain on operating real estate dispositions for each of the three and six months ended June 30, ~~2021~~2023 excludes $0.5 million for the gain on ~~sale~~disposition of ~~easement rights on~~ a non-operating ~~parcel.~~parcel at Market at Mill Creek.

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 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 then-currently available information. Actual results could differ from these estimates. We discuss the accounting policies and estimates that are most critical to understanding our reported financial results in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to the Company's market risk since December 31, ~~2021.~~2022. For a discussion of the Company's exposure to market risk, refer to the Company's market risk disclosure set forth in Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

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Item 4. Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the "Exchange Act"))~~Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the rules 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 June 30, ~~2022,~~2023, 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 June 30, ~~2022,~~2023, 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 Act: (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.

There have been no changes to our internal control over financial reporting during the quarter ended June 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

We are not currently a party, as plaintiff or defendant, to any legal proceedings that we believe to be material or which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition, or results of operations if determined adversely to us. We may be subject to ongoing litigation relating to our portfolio and the properties comprising our portfolio, and we expect to otherwise be party from time to time to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of our business.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Issuer Purchases of Equity Securities

None.

Item 3. Defaults on Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~Compensation of Chief Financial Officer, Treasurer and Corporate Secretary~~

~~On August 5, 2022,~~During the Compensation Committee of our Board of Directors (the “Compensation Committee”) approved new compensatory arrangements for Matthew T. Barnes-Smith, our Chief Financial Officer, Treasurer and Corporate Secretary. As a resultthree months ended June 30, 2023, no director or officer of the ~~new compensatory arrangements, Mr. Barnes-Smith’s base salary~~Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is now $300,000 per year. The Compensation Committee also approved compensation arrangements for Mr. Barnes-Smith pursuant to our short-term incentive program (the “STIP”). As previously disclosed, payouts under the STIP are based on us achieving certain threshold, target and maximum levelsdefined in Item 408(a) of corporate and individual performance metrics. Under the STIP, Mr. Barnes-Smith will be entitled to receive the following cash bonus payout at threshold, target and maximum performance: (1) $65,000 (Threshold), (2) $100,000 (Target) and (3) $135,000 (Maximum). Under the STIP, Mr. Barnes-Smith will be entitled to receive the following restricted stock awards under our Amended and Restated 2013 Equity Incentive Plan at threshold, target and maximum performance: (1) $65,000 (Threshold), (2) $100,000 (Target) and (3) $135,000 (Maximum). The Compensation Committee also approved a monthly automobile allowance (including automobile insurance and gas) for Mr. Barnes-Smith in the amount of $1,950.

~~Executive Severance Benefit Plan~~

On August 5, 2022, the Compensation Committee also approved changes to our previously disclosed Executive Severance Benefit Plan (the “Severance Plan”), in which our named executive officers participate. The Severance Plan provides three levels of benefits; Tier I, Tier II and Tier III. The Compensation Committee approved the designation of Mr. Barnes-Smith as a Tier III participant under the Severance Plan and approved the designation of Shawn J. Tibbetts, our Chief Operating Officer, as a Tier II participant under the Severance Plan. Mr. Tibbetts previously was designated as Tier III participant under the Severance Plan. See “Potential Payments Upon Termination or Change in Control” in our definitive Proxy Statement, dated April 22, 2022, for further information regarding the Severance Plan.Regulation S-K.

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Item 6. Exhibits

The exhibits listed in the accompanying Exhibit Index are filed, furnished or incorporated by reference (as applicable) as part of this Quarterly Report on Form 10-Q.


Exhibit No.						Description
3.1						Articles of Amendment and Restatement of Armada Hoffler Properties, Inc. (Incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3, filed on June 2, 2014).

3.2						Amended and Restated Bylaws of Armada Hoffler Properties, Inc. (Incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on February 24, 2022).



3.3						Articles Supplementary Designating the Rights and Preferences of the 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 17, 2019).

3.4						Articles Supplementary relating to Section 3-802(c) of the Maryland General Corporation Law (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on February 24, 2020).

3.5						Articles Supplementary Designating Additional 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, dated March 6, 2020 (Incorporated by reference to Exhibit 4.10 to the Company’s Form S-3, filed on March 9, 2020).

3.6						Articles Supplementary Designating Additional 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, dated July 2, 2020 (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on July 6, 2020).

3.7						Articles Supplementary Designating Additional 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, dated August 17, 2020 (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on August 20, 2020).

10.1*						~~Indemnification Agreement between Armada Hoffler Properties, Inc. and each of the Directors and Officers listed on Schedule A thereto.~~

31.1*						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*						The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2022,~~2023, were formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheet, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Statements of Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed 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.

104*						Cover page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL.









*						Filed herewith

**						Furnished herewith

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Signatures

Pursuant to the requirements 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.



			ARMADA HOFFLER PROPERTIES, INC.

Date: August ~~5, 2022~~7, 2023			/s/ Louis S. Haddad
			Louis S. Haddad
			President and Chief Executive Officer
			(Principal Executive Officer)

Date: August ~~5, 2022~~7, 2023			/s/ Matthew T. Barnes-Smith
			Matthew T. Barnes-Smith
			Chief Financial Officer, Treasurer and Corporate Secretary
			(Principal Accounting and Financial Officer)

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Development project	Payment guarantee amount		Guarantee liability
Interlock Commercial	$	37,450	$	1,346
Harbor Point Parcel 4 (a)	32,910		242
Total	$	70,360	$	1,588


	Amount Outstanding		Interest Rate (a)			Effective Rate for Variable Debt			Maturity Date	Balance at Maturity
Secured Debt
Marketplace at Hilltop	$	9,492		4.42	%				October 1, 2022	$	9,383
1405 Point	51,914		LIBOR+	2.25	%	4.04	%		January 1, 2023	51,532
Wills Wharf	64,288		LIBOR+	2.25	%	4.04	%		June 26, 2023	64,288
249 Central Park Retail(b)	16,226		LIBOR+	1.60	%	3.85	%	(c)	August 10, 2023	15,935
Fountain Plaza Retail(b)	9,765		LIBOR+	1.60	%	3.85	%	(c)	August 10, 2023	9,589
South Retail(b)	7,124		LIBOR+	1.60	%	3.85	%	(c)	August 10, 2023	6,996
One City Center	23,760		LIBOR+	1.85	%	3.64	%		April 1, 2024	22,559
Chronicle Mill	14,640		LIBOR+	3.00	%	4.79	%		May 5, 2024	14,640
Red Mill Central	2,100			4.80	%				June 17, 2024	1,765
Gainesville Apartments	30,328		LIBOR+	3.00	%	4.79	%		August 31, 2024	30,327
Premier Apartments(d)	16,399		LIBOR+	1.55	%	3.34	%		October 31, 2024	15,848
Premier Retail(d)	8,077		LIBOR+	1.55	%	3.34	%		October 31, 2024	7,806
Red Mill South	5,356			3.57	%				May 1, 2025	4,383
Brooks Crossing Office	14,631		LIBOR+	1.60%		3.39	%		July 1, 2025	13,798
Market at Mill Creek	12,818		LIBOR+	1.55%		3.34	%		July 12, 2025	10,876
Encore Apartments(e)	24,253			2.93	%				February 10, 2026	22,213
4525 Main Street(e)	31,133			2.93	%				February 10, 2026	28,514
Thames Street Wharf	70,044		BSBY+	1.30	%	2.35	%	(c)	September 30, 2026	60,839
Exelon Building	175,000		BSBY+	1.50	%	1.00	%	(f)	November 1, 2026	175,000
Southgate Square	26,656		LIBOR+	1.90	%	3.69	%		December 21, 2026	24,741
Nexton Square	22,500		SOFR+	1.95	%	3.45	%		June 30, 2027	19,453
Greenbrier Square	20,000			3.74%					October 10, 2027	18,049
Lexington Square	14,034			4.50	%				September 1, 2028	12,044
Red Mill North	4,135			4.73	%				December 31, 2028	3,295
Greenside Apartments	32,232			3.17	%				December 15, 2029	26,095
The Residences at Annapolis Junction(g)	84,375		SOFR+	2.66	%	4.16	%	(f)	November 1, 2030	71,183
Smith's Landing	15,997			4.05	%				June 1, 2035	384
Liberty Apartments	13,414			5.66	%				November 1, 2043	90
Edison Apartments	15,747			5.30	%				December 1, 2044	100
The Cosmopolitan	41,670			3.35	%				July 1, 2051	187
Total secured debt	$	878,108								$	741,912
Unsecured debt
Senior unsecured revolving credit facility	$	82,000	LIBOR+	1.30%-1.85%		3.29	%		January 24, 2024	$	82,000
Senior unsecured term loan	19,500		LIBOR+	1.25%-1.80%		3.24	%		January 24, 2025	19,500
Senior unsecured term loan	185,500		LIBOR+	1.25%-1.80%		1.95%-4.47%		(c)	January 24, 2025	185,500
Total unsecured debt	287,000									287,000
Total principal balances	$	1,165,108								$	1,028,912
Other notes payable(h)	9,204
Unamortized GAAP adjustments	(9,599)
Loans reclassified to liabilities related to assets held for sale, net	(84,049)
Indebtedness, net	$	1,080,664