AHH - Earnings call transcript Q4 2017 | Armada Hoffler Properties, Inc.

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Operator

Welcome to Armada Hoffler's fourth quarter 2017 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, you will be invited to participate in a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded today Tuesday, February 6, 2018. I will now turn the conference over to Michael O'Hara, Chief Financial Officer at Armada Hoffler. sir. ahead, go Please

Michael O'Hara

thank conference joining call And quarter Hoffler's XXXX earnings and you morning. Armada for fourth Good webcast.

through Investment and On in the press our Smith, will release CEO, guidance March along fourth-quarter questions. be quarterly to addition and will replay morning. Chief Eric with this to release. A myself, XXXX replay of announcing numbers this available the XXXX. presentation call are conclusion Louis The this X, for distributed Officer, call shortly who The access morning, available are call supplemental the was after provided earnings the and be our our Haddad, earnings of package the in press

that X, For of this are those who and to XXXX initial rebroadcast listen updated you made today, earnings remarks as the subsequent February of not remind will be herein to call. presentation, this

advise we release our and disclosed factors have to are results in uncertainties to we and During can current review documents pipeline, on control. dispositions, that risks this to many future our and are forward-looking disclosure generally cause and the our of the statements morning make or portfolio comments our as statement of press differ portfolio, financing Listeners are including outlook. to which listeners certain the filed of difficult furnished guidance these to subject related performance These activities the predict and impact SEC. in expectations and actual our well forward-looking statements, statements call, to construction business, we'll beyond risks as our our uncertainties, and acquisitions this development materially with risk from performance cautioned our and

Lou? I'll measures, to, available included package, our measures, GAAP well call the certain ArmadaHoffler.com. including, are as now measures comparable our to of discuss FFO Haddad. as in non-GAAP Officer, these non-GAAP on limited supplemental Chief which the also will normalized is to turn reconciliations most FFO. over Executive We the Definitions and website not Lou but financial quarterly

Louis Haddad

and today. full $X.XX of Thanks, for of share, the our share, previous we was We morning, expectations. guidance. us finished at you quarter which our results was per normalized reported which FFO with Mike. year everyone, in joining $X.XX the midpoint Good line morning, per thank This fourth of

which We also our for we XXXX, sheet development briefly stated issued At summarize commentary. for investors back the large on for or balance be ago. occur several of that development that one I'm call growth and in deliver of our And we year like informed pipeline. refer the less our of latter said my on met to guidance pleased most that and that Without to more be executing XXXX, with that of of for is focus XXXX, will half to to year projects. report we what have development the I'd time, we and year this our stabilization goals pipeline to XXXX track significant value anticipated last the any we the strengthening year, expected a slated deliveries anticipated. on flat we all previous with earnings NAV compared delivery earnings would to the beginning eventual To and

earnings. is guidance can even year's The $X.XX. presentation, XXXX per page last over of to results, measurable and XXXX As of deliveries midpoint development expected are provide not see any three you FFO appreciable a share $X our though on range between we normalized impact increase to anticipate this

will from value our strong year our company in business. to leasing all our another for construction deliver our stellar combined aspects Portfolio continue company, shareholders. another with of expect and to acquisitions, year We accretive

NOI leasing four of town from expected all is same to portfolio, projected center XXXX and our look rise portfolio predominantly exclusive is referring to that our with guidance Starting additional Let's in page order. come across incrementally growth at factors types. to acquisitions. product existing presentation, of these This the

by Our increase. expectation expansion to is caused will are and on existing of that with tenants way well construction disruption relocation midyear, the multifamily ending vacancies being my Office backfilled. occupancy

filling anticipate project. also the pockets of We within few vacancy retail the

The the other remains portfolio leased two-thirds the XXs. on of in average high

On and the years. proven sales estate of to demographics. we've acquisitions nearly adhered of tenets and front, the XX monitoring traffic for operators locations, real diligent basic Prime

yielded opportunities the has I sector. properties, last to the such As retail our mentioned of grocery acquire current particularly on call, a in environment host

of few quality our and solidify to of last operators the that as five meet these What but, evaluated importantly, effort. from operation. standards, Over we only pending the months, help and number primary investment centers a are page you see us acquisitions vehicle, growth with our the on fuel identified assets resulting development numerous this and partners our presentation relationships completed guidance development

These and strategy. dismiss. know, OP REITs you predominantly that and geographical addresses tertiary of involve issuance superior secondary the As opportunities we public in invest high-quality of most in trademark a acquisition some our in locations footprint, off-market are markets units, including our

on forward equity Moore their example, to retail Georgia future Publix. of OP We by Moultrie, Center, in half acquisition For in work off-market anchored transaction, with Parkway to the his an acquired closed Parkway this developer, opportunities look in Development in We we the of potential new center partner. of form week, last took which Center Kara units. constructed a back newly

centers two have We South acquisition Lowes of agreed anchored constructed the to in Carolina. Foods also newly on terms

as is both Harris years. transactions located familiar Teeter, on acquisitions Last billion closing on $X one to of of Indian form partner, in Foods cap center late Indian to acted by Lowes and well. acquisition concept over they Lakes, North of is property the developed the Wawa. X.X% as S.J. and asset our with properties in equity upside Publix be acquisitions as with four in these the Lowes cap presentation, those of further we in business these a of on full-service guidance their we comparable Carolina-based, XXX a page percentage nearly five it. Foods not additional a Lakes for million month, you this know engagements family-owned blended XXXX. strategic back an operates are With new previously, the acquire The the at Carolinas. positioning quarter Virginia taking the Again, as We developers retail a temporarily originally meaningful and They've a center totaled second our increase itself, year. transactions $XX of store primarily in Harris I Both when enterprise. quite organization. closed opportunity these But strategic built development on early Beach, and Teeter Lowes We who in were attractive and we off-market of anchored operated involves will for us mentioned quarter For leasing in Collins, and first the include part rate. And supermarkets, units. a will of our Foods, portion OP presented XX been well at the anticipate or rate retail a seen operators. NOI.

office, portion portfolio in be retail our the the As of pipeline. the note of separate is believe here a boutique all facilities is nature shows, that, the shops. venues, these retail. of consists higher and of NOI, entertainment and retail. educational than and delivery a well projected materially XX% are under We mixed-use as This of current primarily tenants charts, represented right stabilization category far with traditional of labeled some Please to professional different restaurants, chart traditional entertainment

Now, turning to construction.

anticipated maintain gross in would sector, the historical to that we to years due million record range decrease high construction was return that to able this decrease This the profit. on profits to third-party for volume in unique XXXX. of report cross-selling expectation contract million end to based of previous norm of of the $X $X contract platform, be despite projected was two after I'm pleased its revenue. historical in expect Our expected to our our

consolidation As I back $XX our as work This continues began the company. million, and mentioned Fortune distribution a a we a history client The selected early long-term building client, construction This giving and a XXX,XXX XXXXs that the or last were sector. third-party of lease, is of center older experience the lease model. today three with new In offered purchase negotiations result only distribution of the build-to-suit industrial optionality in a group rebuilding development, in of XX client construction the ft.² arrangement. long business the this has fee we menu integrated is afforded long-term facilities. quarter, for our with and

this of expected all in favorable to real industrial new typical subsidiary holders expect occupied would've rates we significantly to a contract. to built, will us just monetize it taxable third-party Therefore, law, estate, tax within not XXXX, and than be practical profit under the we the is Due level. sold REIT this this designed, project fees creation As in manner. the contained is are recognition higher the value earned we construction for be long-term

As of and the facilities the well, at disposition tax-free Two level will News these in proceeds regular net the alternatively our resulted than our and type this will for build-to-suit The strategy, exchange. office receives nature. acquiring these can where a used IPO, enable a on a of other four other be exchanges Since to part group under you still us the police precinct Newport will engagements And purposes. while rates buildings, know, balance fairly of basis. construction paid lower precinct, properties on XXXX taxes have opportunity we this TRS Oceaneering tax executed state building, be our our be police building. as handle sheet the

of of see that approximately business the is eight in worth the investments. Turning pipeline $XXX the now you'll now development to guidance page at presentation, here million

are wholesale stabilized, of once our we per share. to estimate that spread increase XX%, will Given these retail typical NAV over $X assets

month. rate we hope reported. Pleasant, our later build-to-suit grocery-anchored with Furthermore, Carolina at Lowes projects Adams Mount as is the the both our Group. on remain be robust in this with what Property already steps partner, to Foods well a expected added Lowes breaking first Construction in we'll to office centers discussed, Crossing be development South pipeline on the the center. at that This track. notice our this in the along as have building Mill center, previously are a with in Industries the The we of Huntington long-term pipeline other Food first development on ground grocer shopping Ingalls for already relationship Creek first our newest previously Brooks all acquisition You'll regional development market

WeWork front, I'm that leasing pre-leasing component has excited city brings one University, the project combined XX%. center. on the XX,XXX office Duke agreed with announce On the lease approximately over of to to to at WeWork, ft.²

the or that rents. will Center. phase six to We and pro year. XXX this one we later stabilization announced are Junction be expect As And of a signed Williams-Sonoma retail result, anchoring over Annapolis previously the leases project. the deliver Barn near Town as center deliver of at forma city there of portions We at Pottery today,

very are the leasing demand. with pleased initial We

next pipeline and to XXXX over call our projects with is fourth discussing guidance to I'll time, Assembly Mike? well and to our of year. development the forward we underway quarter At Mike detail. this discuss results those you turn later this in look

Michael O'Hara

year, per cover I Lou. balance to share highlights the FFO quarter. full fourth morning, our the normalized our thoughts on and want and per sheet of Thanks, of share FFO $X.XX of the guidance. This we reported $X.XX Today, for quarter, XXXX the

in and XXXX. the $X.XX per $X.XX compares For both of full to FFO and $X.XX FFO FFO share. were This FFO normalized normalized of year,

of the for were successful total execution As year accounts for year return we positioning AHH. was growth. XXXX. in We future development XXXX both discussed, of shareholder was XXXX good sheet on the pipeline on balance another a and

the XX% December Since grateful Our the XXXX placed trust with these was RMS. May for our have XX% return shareholder through for and of the We're, IPO in shareholders with obviously, are XXXX, management total returns return versus in versus the RMS. our total X% XX% team. pleased for XX

million, with NOI and negative equity During dividend excess by Same-store cap a a was total of payout was reaching billion the expected. in year, this enterprise XXXX covered in $X.X as an quarter our value for XXXX. cap XX% The billion for peak ratio AFFO increased $X market $XXX December. of and market well equity

two from which the Street, As past impacted in the the well relocation expansion NOI as of Main of discussed XXXX Center significant tenant phase we and office construction quarters, was not have couple to the of by six calculation. is same-store ongoing Town metric this as

space look vacated To have this We re-leased made is XX% illustrate in this spreads. leasing at what progress truly with at occupancy with happening and our approximately our re-leasing time. portfolio,

XX%. XX%, at this XX%, with multifamily and office Our core operating portfolio was occupancy retail XX%, quarter at at

was spreads re-leasing strong X.X% our cash and X.X%. positive for XXXX Additionally, with positive GAAP

fourth of gross On the of the million. construction front, on we reported $XXX,XXX in $XX revenue quarter segment profit

GAAP. $X.X we is segment development For do revenue history also on will years quarter, best in profit include projects construction eliminated volume gross is a the reported of of the $XXX full million. the of These This on construction numbers of Construction XXXX, the the material third-party our year, construction group. million. company our approaching the be one $XX backlog not $XXX million million. a volume had in fourth on under development million, projects which of our of end $XX At the of

Now, turning to balance our sheet.

to the on sheet balance our enhance loan actions of take to and possibility continue work We maturities.

balance private XX maintaining strong successful years, a sheet as in to was public As for discussing, prior going we've been being a in company instrumental XXXX.

our XX%, did With current any in intend equity on shareholder largest the new the the this fourth ATM changed. issue approach not following a metrics with this team With program has month not quarter, the along we but on leverage XXK. being well-positioned, management at

would We used new ATM this including These expect non-core under are favorable. we issue equity proceeds for assets. be selling to program other deleveraging. year further market options, the have If not, if conditions

availability a development seeing opportunities we're and projects. of of capital for these want the Additionally, lot

well. work XXXX. continue in We The facility to maturities to on early scheduled as was revolver loan credit mature

loan term $XXX including Harris plus million in of for At $XX a $XXX The the In was million five $XXX years debt facility in the facility. revolver the to million years under maturity. ahead $XXX This matures loan. Teeter facility on loan outstanding extended at year, we revolver of facility end $XXX During to million. X.XX%. January, an of accordion matures Sandbridge and total quarter, the The revolving Center credit outstanding includes credit four we term new million, with fourth the and LIBOR closed million million five. the the $XXX new had is stay

and We Again, last add at cap opportune continue we introduced rate of exposure to either value $X.XX rate million exposure. X.X%. to look to our $X a for interest quarter-end, XXX% interest guidance hedged. interest two-year At Today, XXXX to rates our was debt or time of per higher our to quarter, $XX we fixed purchased share.

any and evolved platform. before asset guidance this sell the distribution our from this includes project intend sale we're cross-selling debt expected project. Because will We associated it's corresponding to by EBITDA FFO project for the not placed an As business in debt to gross service of our our Lou rate. this discussed, from range This XXXX estate profit transaction presentation. short-term of nature six being cap the have profit included the as of issuing guidance of view in page of and will company. as guidance of TRS to included sheet and This due has on this EBITDA. in client in example debt, the we a both the with for opportunistic construction exit equity center We no a company guidance. an another construction balance part of variability expected as normalized sale this impact that carry this The the on FFO. the wider-than-normal real normalized This this the is is illustrated

I'd like through details Now, of XXXX the go turn the to to page Please guidance. presentation. three of the

in of sale center ATM fourth pending the through to normalized our range. at expense the three $XX.X of FFO be first to the FFO time following: on diligence, to share the the than with on the previous late Since assumptions. in in is higher Interest starting substantially calculated second of raising expect two retail X.X% LIBOR due to we million rising sale, quarters. close guidance quarter. The the quarter first This the quarter, fourth rates in million will quarter the four $X program, of be closed full centers, per is NOI the or on two acquisition forecasts will the million based year-end. curve, distribution the the recognized in predicated Total which which of $XX the the early First, quarter, other $X.XX $XX.X by

million in million Interest gross million in the million construction to administrative General $XX to range. mezzanine million range. financing the $X million in profit expense Third-party $XX.X the program $X.X range. to $X.X from and $X.X income

the these $XX.X year-end, Interest the and of in expense balance loans mezzanine million was outstanding. loan aggregate average $XX.X As million. to range million weighted million $XX to XX.X shares

I'll the Lou. turn Now, call back to

Louis Haddad

yields company. We a balance the the Mike. pipeline growth we nearing has With Thanks, an combining annually and exceptional shareholders. of When well-covered over these delivering still in delivery performance we value years. few extremely increased remain of for with X%, our are are that factors we sheet, our excess believe solid the bullish poised we significant that a and dividend of to feel accretive next

meeting issue our shortly and We for and to at thereafter. dividend Hoffler. XX quarterly interest time will Operator, begin a session. Board discussing on release in morning we of like the the be Directors your will February Armada we your this would Thank you question-and-answer press

Operator

Instructions]. you. [Operator Thank

first Our from Rodgers Company. question from is David Baird today and coming

now Your is live. line

David Rodgers

Yes. thanks for Good morning, XXXX the guidance And presentation. guys.

I think the Each I about asset helpful. that to just above around is Center or XX%. ask was left space really at, office kind at quickly that's overall. hovering guess, somewhere of the Town wanted I

guys like bunch seems pockets, it small So, pretty you a have but good activity. of sounds it some like

Lou, So, there? color additional add any you could

Louis Haddad

Sure.

I smaller I that the XXXX about feel that that here of seeing people are We're I uptick say really activity space seeing economy, the five the – tenants good with space. of occupying looking. to with good want vacated to going in late, rest vacancy. of half filling Dave. about guess, really actively that filled we to more we're has the now tenants with been those relocated So, it's a be

said, in pockets. all pretty it's small much As you

going. slow getting mid-XXs where in the we're of office traditionally been Town we've forward looking But kind it's back to Center. in So, into

David Rodgers

then, developments year you're just of Street looking completing. starting within projects? of pretty the shifting residential And up, Annapolis on coming curious good You've how felt some play I'm those How gears terms out? of and those to and on of are past. market to Point update are in on the those the in Junction kind any rents

Louis Haddad

I get Both the That's of than our end the results cautious that the really we try the certainly the up far. beginning, question. leases that are towards answer. not until want predominantly signed forma to have initial properties, these lease with above be great about I a rents. but to of get been overly the encouraged about excited pro thus rather

David Rodgers

And thoughts of Obviously, But Great. the environment. from on little for first then, these quarter in the about seeing thee maybe more relative Any for. can remainder yields on you're last some to you're landscape? you here bit you in purchases me, a that curious more the acquisitions retail the guidance talk the viewing could retail here, additional the how what replace the quarter. maybe assets and

Louis Haddad

What demand hasn't retail XX for, and lease high and in our pockets change Sure. of specifically, company, of it up high change estate anytime opening just soon. don't operate That expect let and I'm as years but, to more going we're in operator. I to for real very I as question my quality few generally, space. high-quality looking Eric a we the continue is partners properties comments, with very going seeing real estate this on, said to high-quality answer high

occupancy. and I'll the now fully. hope into explain XX% dispositions, up the on I more some at Xs to properties, low The lease that let something yield potential these think particular Eric we're but also on retail by like get we

Eric Smith

the coupled my said, the I I exactly in yields these Lou the comments, but I'll Dave. on the anecdotally, estate, we upside And Lou. opportunity quickly highlight what comments, the Sure. to of on expand Thanks, with be touch focused think, how will brief lastly, thanks, very and, because our relationships. real including each will then opportunity

And into at extremely a And cap rate there's going at the first blush, in Indian in having peel We, the familiar an while Wawa it's developed and high with, it. obviously, something approaching were low to cap locally. here high-value know real on it very So, the obviously, rate to Xs, off appears Lakes, attractive we NOI get opportunity be X. well that estate. Xs,

a door shadowed asset a anchor have still We submarket. grocery right XXX% perennially store very that's next strong leased,

the providers a the to in rate Now, this cap you to acquisition you the lot go turning same which XX,XXX have you X that county shop markets and in down backs that yet half Publix not but and with expect down local population. [ph], rent, and and the in on range find to space off-brand Tifton, ground, with put going at But the was diligencing get we driving all, the a from asset. actually Publix that are boots that competitors move to low-cost to of trips Georgia, Oxleys round when mid-Xs, given cetera the doesn't you small out at X-X-X in have This like into on Moultrie, to surrounding a the we a hour as mile Harveys We population spent anywhere time shop cities. demographics have their hour arguably again, and well. and et Valdosta, the Thomasville,

good. city. to limited so, take wanted this in site was only feel And to be we the in, very This Publix

feel we estate. the so, about real really And good

some the and the South upside Carolina demographics just Carolina the Greer. in other of outside beltloop on area with very similar and about those touch as two there You strong opportunities well Lexington, discussed. talking the we're we with And we're in pleased Greenville, South

in asset with again and the the of So, with look outlined, opportunity Collins those of talking Lou from talked the Pleasant an strategic partners. Publix Group, lot Group. We Georgia development Moore Adams Lexington in of metrics the Kara the our Mount the OP taking you're about that and across when the one with a with them the back the through you the and acquisitions unit, acquisition of acquisition S.J. about lenses

a about might more and that are Lowes Alex well billion as you're Foods feel business strong all Publix relationships little But talking So, that lot Publix, competitor, partners Foods concepts, plan their of spent with as long-term $X then, many team their long-term in-store concepts. we new bit operator with. be unique their high we And And well-known, local time at – and of Harris very of conglomerate. headquarters sourced and their on part less service Teeter a given we organic concepts as every a with and the it's true well doing levels. local their Lee given Whole corporate their touring as and

feel we real comfortable about operators and, so, the very And those partnership relationships and obviously, itself. those estate

David Rodgers

all Thanks, Thanks, guys. color. Eric. Appreciate the

Operator

The question with Lykins question. next from D.A. your Please coming with you. Thank Davidson. is proceed Jim

Jim Lykins

Good morning, guys. taking question. And for my thanks

Louis Haddad

Good morning, Jim.

Jim Lykins

Hey.

one press So, first you and those at two the value-add first you I may can, in able either There two all, the for think component that for And that the wondering all, a of see on Occupancy, us rents? the those? one to other how then you if Georgia, transactions. any one. footage much of of color be in give didn't I'm square be acquisitions, release push might

Louis Haddad

Absolutely. Again, take I'll that. let Eric

Jim Lykins

going center. a Sure. at occupied similar mentioned We're I order in them, Lakes. XX% In start Indian with on I'll XX,XXX that ft.²

So, you ft.² over vacant. a little have XXXX

in Parkway approaching Wawa so there and good over Georgia, ft.² is to And I on little those, going feel cap all goal the happy off Like that it in you finally, getting hour XX,XXX Xs to upward to neighboring three market. get from mentioned, retail metrics. those the the I of addition new said, go towns an route upside a you is the there's were which northeast vacant Main the is corridor XXXX why what under in across be leasing this to this that come of there you rate, market. of rates. kind is other with to about note the the here And where Moultrie, we cap we said, market rate, four really in as at to good Main Center this then, over the an just to at ft.². is in spin of X the we mid-X on filling in Like we also about time, could have to over low with doing and folks round XXX mentioned that bays town X. a corridor, – retail side on across in trip So, players three we We're then, have there. upside Publix is retail and that hour-and-a-half for feel on I in some that re-leasing And that the

that And that extent the at so, will it Publix shop small there in this this demand center. is in be intersection market,

that not really rollover we rates asset good push feel over the only to the being but, so, having And filling future. market as leases about space, able that time, in premier in those

Jim Lykins

far into what side? on you could talk with trends Okay. you're your leasing QX It's also, And also, And anyone, helpful. retail the who, so very about just if may on be now? seeing watchlist right

Louis Haddad

had Again, small It's a have very rollover retail robust. on good tenant and Mike leasing amount been Jim, as mentioned, seeing spreads, healthy. very it's of the just We're side, vacancy. been

in that as list, Beyond watch Bath centers & four own I've our them. of we terms still mentioned Bed, In have before,

somewhat are as them a company. about We concerned

that However, store. skewing stores of doing the are the to in they're volumes their our high average end

we might current Certainly, feel well that think, reached. as really sales. and we're in particularly as locations to about lines We has see. of out environment. before, us And we'll to those see rotation Buy-Low. where I've good eventuality of stores. the good before, But an couple see mentioned ourselves next So, think you'll will, reason dump mentioned no for portfolio that at being the long-term, as go could divesting that portfolio few them, of really I food Feel if as the value the years. continually we those those three looking But, we've the mentioned you actually have I peak over in I've re-lease this out, able still those. been

Jim Lykins

Okay. pop And queue. back Thanks, I'll Lou. the in

Operator

you. Thank The Stevenson Montgomery coming from from next Scott. Janney Rob question is

Your live. line is now

Rob Stevenson

their The actually those Just Save build and going you're guys. morning, or Lowes not stores anchor buy, are Lowes that to Good right? Foods concept, stores

Louis Haddad

they correct. Lowes Lowes might the Foods, concept is start all difference would which not Food be with the but for add were who only that, They and to market And And time older Lowes their between but familiar phone the the that and to they new are very those on is concept older concept, store I there notable a to their That said, stores. are – with, demoing the buyers the would with store new fan know stores, we like concept. a I we're new be their customers. of big we spent lot working of don't concept

Rob Stevenson

ones the currently, a a Kroger sales-wise in Publix compare are are that does Harris Teeter or how that operating or market? a a what for they doing similar and And

Louis Haddad

par Sure. – the information store has a with the diligence, down they approaching South months, year that $XXX we are Lexington not not on research in be located sales at but they that a I right competitors excess believe cetera, based that street, mentioned street, if the And few and let's per start we are across have see, the Carolina early The based the open trends that foot about are same square on been with, location. – submarket. our in their and open, even Greer/Greenville, They've better. et Then to of for but when a been expect square let's we on foot.

Rob Stevenson

school there next down I know this preleased, whatever how talking don't Okay. with the Duke the and next XX% one – now you That's leased this Center kicking numbers preleased the But one there. point XX% the what City at guys to Lou, then, start at point. Thanks. or the already work is is project project down or do great. start And off to

Louis Haddad

is to going answer several Great next several months the of about for developments. going talks us is believe been zeroing a next They're the anchoring question, going we large, that's some pipeline one the high-rise. is really mixed current My question with that value on. you're in months type Duke add we've And stock that to over the the last in use of to public-private same kind the to Rob. exciting the for expectations see announcements that new

Rob Stevenson

of million and went have you they this your or $XX stayed about lower. talked Mike guys that ATM the And if in issuance Okay. guidance point alternatives at low to

At OP about OP but going you've about do at that how at already an that versus something like that like you cycle? or deals or the a talked units units that price You not just cash in asset selling in point only including close. deals some are this having to XX-and-change, using feel closed,

Louis Haddad

And we order guess, own develop of something that it's I have evaluate. online, question. long-term. in great We've got we properties these to number a to continually coming properties a them That's

the if not any cost. stock we're the a as amount like again, shareholder pipeline. However, looks we're to afraid it, think reap at We NAV with tremendous and book not isn't way value then it that's would adding this some of cash. the that And we largest like trading of the

operate But and our sources not bucks. availability As I we need that you get eye know, towards going is a to excited to with simply the it XX hit on use going hits excited capital this didn't of the overly And stock static we market what's business bucks. when in for Not best get can. the XX game. an the when overly

Eric Smith

as I'll sell quickly, after both add transaction is very transacted were material days. those at price Lou's closed cases, transaction in pending last a off this the than as units current stock to higher that that the the the OP OP few which price both issued for units were comment well the

Rob Stevenson

guidance, chart the development that then that's Okay, breakdown the with page you've portfolio. showing And I portfolio the portfolio stabilized got got forget, great. and – pie – given comment, is then, it on of you've five Lou, what current

were classes your upward mix of being other probably most How asset portfolio? from portfolio you is stuff classes XX%, comfortable period start sell having wind you gains retail would in to from there, saying, to harvesting Is XX%, there wind when multifamily – the mean, you of If as gets bound liquid. stuff XX% where up you obviously, you the there, well go out start retail got as even other time to if I've think? up some I XX% an asset for the guys to selling

Louis Haddad

there. too The We're the we've stores. that not look up. we These don't to really we've real as or estate solid very we sales retail be office own. that market real from holding about use at with the before, estate. grocery-anchored those XX% remember, and The whack. a game. long And intend long-term These said, are forming to let really We don't retail to majority about estate to professionals, this although And recycling want turn department pay reactors. feel and stores own. like be leased comfortable takes not not feel want They're that we are real to retail – of continue assets haul. are always into far well are things. us we a retail there, the Investors that XXX% this to be We're stores have is going are as estate got comfortable centers said the or That away that to for is as us out to pipeline pipeline They're that mixed We good to going such, always of big boxes. it that's real But, mixed-use malls. get the more not residential. centers are company. we going going

Rob Stevenson

doesn't feel Okay. And so one, too lonely. for that Mike, last then, he

Michael O'Hara

Thanks, Rob.

Rob Stevenson

expenses in of or anything it variety there Why are expenses? apartment running a was Was the just the segment same-store drove or at property high really number up particular, XXXX that else, so in in tax X.X%? something

Michael O'Hara

It Yeah. three areas. was in

is were First taxes. third real And and then and estate maintenance. the repairs utilities

its especially money ageing of putting into things. So, at as and those carpet the refresh Cosmo and kinds

Rob Stevenson

guys. Thanks, it. Okay. Appreciate

Operator

you. Thank

Bank your Lynch. from Feldman of proceed coming is Merrill question. Please with question from next America Your James

Unidentified Analyst

and had And office guidance? in morning. same-store your expectations you multifamily leasing Feldman. in in for This NOI [ph] office XXXX seems are Thanks. And NOI Kim same-store good discuss like for is XXXX. drivers meaningful included spreads Jamie It your Can segments? Hong-Hong these

Louis Haddad

Sure. Mike?

Michael O'Hara

middle same-store to started on office. a see of we're the has happen. year, in middle the The effects to on re-leasing NOI, the rebound the on expecting especially So,

start will that year. pool So, well will hitting That of in the come Main Street. as as pool XXXX next in be same-store there, those third the NOI the quarter leases

expecting same-store is are to to the expecting NOI, back at retail. And had So, are climb on the same. to Multi-family, years the a Cosmo. see rebounding. We're going office, past expecting of like the couple obviously, on begin retail, we occupancy slight in we growth we've be

Unidentified Analyst

Okay. And of anchor then, in type lot I what know space. of you just tenants the spoke Currently, seeing you winners about more grocery are losers speaking, anchor grocery for? the looking retail acquisitions, a and we're but broadly

tenants in the these how are time? over of think you what look you will these for and characteristics types anchors do So, be successful grocery

Louis Haddad

working Sure. We've Harris got and long-standing Foods. Lowes one on And now, this Kroger, forming we're relationships we're Teeter with hard with opportunity. Whole

competitive well us, is proven operators that's the as looking there. out business, long-term in as the For it set at

would So, a credit growth. line. are I'd wrong of we're we thinking with think We them, behind Europeans, stores going those from the see anywhere. theirs lot seeing not lot have don't why particularly at line. anything we're and they food with there's of mentioned But food low-end, the that And of Delhaize pressure a that not that's

as and about, All operator shops. can on acquisitions. company that the the of getting as come well not a through are want of to looking combination several the well. the opportunities. sure I phone and this set good a need as of strict the is it's small everybody by to both us with proven us, For partner, sales, make together. understands further is feel It's that's development And, we up over as factors that the over. those irrespective lifeblood who to grocery bring That's of grow for in But meaningfully that over It's familiarity we operator, evidenced location an a It's our factors. in accretion course, business.

on spread wholesale our same to something lens and cost our a also, the And retail is is growth. buying to value applied in that fuel X because creating cap it's Simply the isn't OP development going go. it opportunities, and enough us to But is units, capital to of us, want low when the acquisitions. For act. at the to moves needle where far we another that opportunity Xs partner that contains an same for as through as well further bring acquisition, board

Unidentified Analyst

the what WeWork have color. then, for are landlord, or regarding type on that Center? broadly you lease attracted as of XQ, you specifically think in One WeWork? platforms And WeWork to open Thank a will And to co-working do impact Okay. you City

Louis Haddad

the a we of the the can leader to ready that successful as amount a number as is different something of to we're embracing I WeWork far most and And away see, best sure bring that across the believe embrace It's names. the capitalized. model. is market It's to energy going it. I'm tremendous far not building. and

Durham. particular of along So, the we're with we've picking in it activity. also I his validates tenant. further about base their a that them what all announcements downtown have couple around of of They're portfolio. as operations looking at about think really And Durham. been excited other we're our facilities to I our going building Tremendous thinking suspect

Unidentified Analyst

what then, to me EBITDA XXXX. then, year-end once developments the for all for process your year-end at And one X.X the And your leverage in look will the debt net and in Okay. like deliver? Wondering is, last to comfort what was range XXXX. are is

Michael O'Hara

Yeah.

to dropped debt the previous profit quarters. affecting our from EBITDA fourth construction quite quarter. company's The climbed a mainly quarter, bit fourth gross So, in the

We are in to core saying X to EBITDA the and in certainly core range. times mid we with we're it debt comfortable range, try focus something which the where keep that is

business. now this to then, quarter. our is fourth in will where it's where debt For want be associated XXXX. be times want EBITDA, or I'd to range, the the and range, months the we're about static talked the during than between carrying XX be certainly XXXX, X.X but of at in little going it until higher to looking what's have. happen out be to a that a of the to we and because That's not the we that been range Long last going not distribution sort going has year typical center And

There's As Lou a of of a was looking right development saying, projects we're now. lot at lot activity.

we're So, plan it together. and as the working on XXXX comes

Unidentified Analyst

Okay, thank so much. you

Operator

you. Thank

from Our FBR. is B. question Craig next coming from Kucera Riley

live. now is line Your

Craig Kucera

guys. appreciate the sheet. Hi, your balance on I Mike, commentary

about in here next rolling rate tack Do – managing of caps rolling $XXX of just taking regard maybe about those you got again are floating in off you interest couple different the or extending quarters. a anticipate or rate debt? your thinking million You've to

Michael O'Hara

to things. we're two Certainly, going to look stick with We're caps. going at

a us, it's pre-payable don't – that have have For a good assets pool that debt. have way to of

for looking be gives buying school caps it disposition look flexibility pricing. will LIBOR will and unencumbering asset some keeping at or couple of more there is We've for for of a probably are the that XXX% the anymore at something X% that second debt. won't So, coming for be X.XX% to – going very The one year properties been the project, starting credit at which and of look the at up facility next we we'll through or but good start rating. And the or fixed here strong. being Obviously, leased. be got long-term now X.X% certainly a value Obviously, rate credit to them the that, JHU has leasing part debt. --

a to at is So, look a take opportunity now good one. that

Craig Kucera

it. Got

property the such occupancy, have recovery? kind because Going to see Is that I the think, year school can of Are we'll wait split Liberty. at of quarter-over-quarter, there? you particularly to the multifamily next there start portfolio, we there of between a was until some things other side that do that

Louis Haddad

an Inc. see that's going be not news right But want period and come any of Ingalls extended to it's now. time Huntington as good to and I'm this with some We to lot ship going and offing sits speak multiyear. Liberty. in with for to be Huntington property be it's stress of I the major with a overhaul behaving. There be for XXs we're giving pleased to here School it attention, that another do of we're with with a profile. as appears for It it where get not Ingalls, going in where our that they of is goals frank working admittance question. performing we're great a the why at don't as the raise the we is to reason year. reason going really the and that be attention I and get shouldn't this to We're And it's it's the lot better, with pleased that Not there. cyclical don't rolling why brutally see in a we're about have and That's Apprentice shouldn't one

Craig Kucera

me. Okay. more And for one

couple price you perspective, a Just that give modeling deals priced many going where you was? Can us had and units. you what you units the mentioned a specifically how issued OP of from were

Michael O'Hara

of specifically It I worth. closed of number Or the don't on units was remember when And of will that the million Lexington dollars' couple million couple deal. be a one. we worth a was dollars' on the slightly that our sub handle so. went those with that low deal XX in That's partner. XX. And believe range down on one the XX, Georgia, that cut in – XX off just I or

Craig Kucera

Okay, thank you.

Operator

Thank you.

Guinee Our next today Stifel. John is coming from from question

live. now is line Your

John Guinee

the cents an a Great. second, for FFO into you're after-tax the normalized then, and basis, FFO a questions. Exactly on on build-to-suit, basis. on core on And more a the build-to-suit or and Two putting big big co-tenancy deal picture, these in planning basis, dollar underwriting industrial in favored to nation clauses, co-tenancy you're and you is buying are in centers? nations occupancy do and both nationals clauses. you and give clauses regional these then days have also how when occupancy favored tenants clauses, retail attracting food-anchored What growth

Louis Haddad

Okay. Good All by John. way. right, the morning,

time. take those a one at me Let

dollars' design, charged been us We'd arrangements, development. selected we're Had this. we our the distribution get about build That's couple is. client on that would've basically obviously, center, in well Fortune dependent center, of another will the headed. $X.XX them as X% this So, lease ultimate have term way In upon what looking the range. it cap way for as that, exit and a distribution have construction rate long them XX fees profit million at the worth is would simply to it

out obviously, a with, an So, in extremely now is but the XX-year triple there net lot variability marketplace. lease of the company, right there strong

you go about range. and dollars. down expectations With the our believe couple I an that's I to this go of John, our co-tenancies, mixed-use But, with wide again, million credit. before. the couple retail a there's of the on talked nature different don't going because of extra for And, reason up. regard That, to is categories. going for have can of it's what's obviously, So,

they're of in but mixed-use, these our street. the competing of tenants, back to important. and boutique entire they that to center In those terms market, William-Sonoma There retailers types Anthropologys a attract one is and we're tremendous very the talking are secondary basically store is you of market, amount Lululemons going there for And – with do all are second. which not Virginia the a represent and the a where in don't what up about mixed-use, that. like down Beach, for In of order

secondary You're competing with other markets.

tenant. have a in for of secondary cities, So, XX an and be secondary there Anthropology opportunities cities the that stores might after handful might

as the rate. to us high improvement are they like. stressed do these be I've or themselves. the space other restaurants or demand and in moneymaking they enable don't before, of entertainment They not What of rates, very tenants amount pay for mixed-use that very tenant and they professional propositions a So, in at office tremendous a do favorable is you get or

the very to have So, where going you putting when adhere something mix in to list, are are we with in. short to long it's long folks people tied co-tenancy stay. a and answer up to constantly to get these look basically And you keep question, at these order a

what in and dark. Obviously, XX,XXX a most having that that, talking centers XX,XXX stringent. grocery store small give grocery-anchored beyond the will the be there is have less give we is or where anchor not feet we're grocery covenant somewhere not a small we're that between of and But anything. The of far about terms will space, buy, we will somebody shops. you go stores In basically, that to shop

at I've shops good. Re-leasing robust are been XX% us. for has small As very spreads occupancy leasing or so. said, in We're

of somewhat slowdown not mom-and-pops, wherever But, any those that You are go those particularly in seeing, refilled. exposed Internet again, people sales. getting and to of some seeing velocity them again, spaces pressured we're are out, the

John Guinee

would out FFO And guidance out give which of to carve should I wanted XQ, us If profit just $X.XX of $X.XX, for carve-out I $X.XX Great. to the follow-up. XXXX? a quick build-to-suit

Louis Haddad

if in that that the I the number think – don't value simply to in right I basically is what cut neighborhood. think would we've said half. you that's you spent build,

don't – but is think I your I correct. math So,

John Guinee

great. Okay, Thank you.

Operator

Thank you.

Partners. with your Stonegate Laura from from next question. question Engel coming today Please is proceed Our Capital

Laura Engel

like question. a other been have Good in look bit compare at versus but morning. Thanks guess, XXXX, things In that that the be It the so to other going answered. disposition for we pretty disposition how I activity the any get year with for taking this might little you're for on later discussing year? portfolio, year industrial I'll thoughts know broadly, overall? year maybe maybe my before released sounds to Most than or I quick. it that general, fixed we're this can here, prior

Louis Haddad

We're for also be anticipating further they the likely that got XXXX. nauseum. year, about using we've we've this more a most and going pipeline talked Again, pipeline Sure. strong assuming very not developing give XXXX market ad ATM that's a favorable. may in conditions got We've to are us Again, in than favorable. requirements the capital

may when have long-term. to things that pipeline can't desire we we where of entirety in capital. NAV the its so, need irrespective much in you to of And that's be raise our position pay own reap the flexibility some a creating not market, but that in We to to to might part attention you we too of try maintain. ignore to it that our these And we're decide

going very and that $XX be say don't So, realistic. goes We'll would we're up at that – we that stock I being if sell anything. looking the strongly. ends would to our druthers back to see

Laura Engel

as Okay. insight. appreciate the well information the always Well, as all good market

taking for you thank question. So, my

Louis Haddad

Thank you.

Operator

Thank you.

from Raymond James. Crow is Our next question from coming Bill

line is live. now You

William Crow

issuance quarter? your for What loaded? backend far Good is each you it built guidance? into is that the the as what pro you, ATM, – of have morning, guys. assumption maybe far as as the Mike, as rata Is

Michael O'Hara

million What's a $XX here first is quarter million built in the quarter thereafter. then in for $XX and

William Crow

capital, you based helpful. asset year? let's year equity? you position And what's that for assuming anticipate does similar activity next raise will do then, next that you through some sale, all an done, additional issuance having Or the amount raise say, gets that for a again to other occur without way that on delivering Okay, or that's

Michael O'Hara

that we're a are answer I'm some going we've mixed-use mean, now much large said, build-to-suit on to looking Bill, say got take that going right to too projects. question. going there's large, of couple at partnerships certainly public-private now right Lou Like to I that capital.

we can So, with and what's on give answer projects that. the see when we time, development better these going on a

Louis Haddad

succeed decision can to just we've imagine, develops $XXX-plus-million phone you're what our long-term continually. on that next as in taking capital, Duke fly And is our discussed as looking we in else high-rise on And portfolio. done be own starts with our Bill, you we going at to and If bringing versus this together, project the that equation has do today. be, mixed-use the everything another facility.

So, now. it's put to there really out anything right difficult

William Crow

would about was I look I announced through that fair. incremental the can as after delivered be from a guess that's that things just been what's we Yeah, what's gets Obviously, capital thinking announced, perspective. XXXX. being

So, – if the remains market ahead. go

Louis Haddad

we that's not stop and a selling – the completely to we XXXX, were and of in a bit my But just obviously basically If That's just going not deliver guess in anything little only capital. Sure. it's is everything pipeline forward happen. moving static hypothetical. and would need

William Crow

understand. No, I Yeah.

thank guys. Okay, it. you, Appreciate

Operator

closing I'd over of end floor question-and-answer the reached We've to further our session. turn management back to Thank you. any comments. the like for

Louis Haddad

some today. coming appreciate And couple have that, of And having Yes. announcement attention announcing for attention. our to board products We I Thanks forward up year. great to meeting new this coming questions. look in hopefully, – everybody's Great really weeks. subsequent an your a projects again a after day.

Operator

does teleconference. you. today's That Thank conclude

thank You you at have for your today. may We participation and line wonderful disconnect time a your this day.

Armada Hoffler Properties (AHH) 6 Feb 182017 Q4 Earnings call transcript