AHH - Earnings call transcript Q2 2019 | Armada Hoffler Properties, Inc.

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Operator

Greetings, welcome to Armada Hoffler's Second Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, Thursday, August 1, 2019.

I will now turn the conference call over to the speaker for today, Michael O'Hara, Chief Financial Officer at Armada Hoffler. Please proceed, sir.

Michael O'Hara

Good morning, and thank you for joining Armada Hoffler's Second Quarter 2019 Earnings Conference Call and Webcast.

morning, to this Haddad, is call CEO. the in myself, addition Lou On

announcing earnings, The the replay second quarterly press through provided after our The release in the of quarter access will available were call the this the are conclusion call X, supplemental distributed release. along to morning. earnings this A XXXX. press of September be shortly numbers package, our with replay

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

our predict activities these and financing cautioned many During we business, are our program, performance are call, our portfolio, statements well certain of our on and control. statements, risks including to portfolio our to related dispositions, comments generally to as outlook. our which development uncertainties, this of guidance mezzanine make future Listeners and impact performance as will and Construction the statements pipeline, of beyond forward-looking subject our and acquisitions are that difficult

risks and These to documents advise cause uncertainties this release the differ results the our have factors morning we review with in statement press we forward-looking disclosure listeners to filed SEC. current the our and and materially from and furnished to risk can expectations, actual disclosed or

available Definition website non-GAAP certain included package, measures, armadahoffler.com. these most but on is FFO including, FFO. are GAAP the discuss normalized not reconciliations at measures quarterly financial in also non-GAAP to, will our supplemental as of comparable well to which We and the measures as limited

Lou? Lou to I our will call over now Chief Executive Officer, turn Haddad. the

Louis Haddad

you morning, everyone, us and Thanks joining for Mike. Good thank today.

and activities are over other go you first level undertaken comment Before our our results on being that at we company. macro some the on operating activities, I'll update

has years. management place know, of been senior team most As you in our for many

to important middle executives much tremendously who strategies. growth in managers the are our take pride success junior also and and We

the with with augmented we several experience. this two of executives wealth past a prior months REIT strength In have of the addition

First and of Officer, two Jonathan Mike Zalinski, estate was already flight team recently professionals. of the These hiring of gentlemen the Finance expand Chief top addition real Director, an Investment Morris. more

we Additionally, perhaps issuing COO a be importantly, the most family. release will Armada a soon and new press Hoffler to welcoming

current growth, the While can between least next our are continue that come. XX-year these stellar be already outperformance expectation for we place, executives our a at professionals is profitability and will place and our X in confident years, for of that record decades of new to rising in track group leadership

Another initiative Hampton that Asset is strategic underway support from her our of excellent Shelly portfolio by review led with CIO and team. President is a being our Management,

well-known the this become reviews. to is longer comprehensive we've quality, for in and term assets our more routinely highest it from portfolio trimming While of than keep noncore nature effort our previous

$XXX probably that months some as total over are office will to indications range couple real group centers well to these expect older million $XX of over course be several identify of include the properties next of We worth neighborhood we space. properties the This for disposition that our would as of several estate. in Early XXXX. will million will slated the of

I'll this repositioning is emphasize not here a that effort.

stability assets continuation that of use current diversified been stellar. of company. achieve is strategy our recycling growth we our and multiyear portfolio of with comfortable allocation performance capital advantageous a to has The our maximize very the are the to most We and This our the long-established of platform. simply

anticipated Some of to used proceeds be the fund the next development will pipeline.

if some the we Exchanges. value be they Tax-free rescinded from to assets market. Some may higher will And be appropriate are growth usual, used feel purchase XXXX don't receiving through as

with initiative on be the give of to next quarter's able to clarification further you and expect results. We this timing breadth

with Moving of current which earnings per most in of share this onto line $X.XX we morning expectations. normalized was FFO have our that seen our you reported release,

due we second This portfolio. a and metrics per year acquisitions importantly, primarily share. raised note new in accretive our More of over range Please our full leasing to quarter the guidance $X.XX very to strong $X.XX results. the increase across the midpoint is share increase to the XX% that represents per XXXX

share to the income That next our and XXXX, regard as we pipeline the into enhance moderating development to we of As NOI continue digits. program earnings decrease new we the robust will past to likely trend, per have in growth with in while quality. result of expansion to expect a overall along year's said, the mezzanine is noncore anticipated for continue said with disposition increase. expectation mid-single This most portfolio portfolio assets launch will and NAV

Mike on not XX% Though quarter, grow expect across store basis. to same NOI the increase multifamily do Certainly, on the of for highlights the at expand must fifth a the emphasize will quarter. consecutive important our in we I impressive year-over-year portfolio the

expect healthy continue. the growth we However, portfolio in to

City Company move time Let's Newport is has remainder to office leased deliveries. News. occupied pipeline the entire on This commenced News, and Ingalls Brooks in the square most Newport rent the with Crossing XX% The was feet. of with to Virginia, XXX,XXX recent development the Fortune on Huntington asset building the by starting delivered Industries XXX on

the Charleston, the amongst history sales near the was on XX% chain. South best the returns leased. early were now Mill The with opening Foods delivered Creek Lowes and early of the time at in the is Market from center spectacular, The of Carolina,

the are this occupied. in reaffirms roughly Point apartments The months, our performance project confidence went development. from entire which XXXX at of full in Harbor Point, XX% The impressive to delivery now occupancy XX

months leasing Wharf from adjacent building, and despite continue see continues delivery, several Wills being Construction office our on robust we to activity.

the negotiation of XXXX. XX% Assuming project leases letters intent, and will occupancy final execution full achieve be preleased of in may and during

a on of city properties, a within trophy quality two give mass adjacent properties Thames critical purchase building, essentially Street office a with Point along These at city. our the Waterfront Baltimore Harbor high-end of Wharf us the

the yield years the We and of expect to three lead can come. we economy achieve in scale these that through expansion synergy to assets will that significant

our intend to with a the Development over sought-after destination In location building continue partner, concert long mixed-use out this term. world the Group, class into BD we

For at of a a in supplemental. look page glimpse XX take for development, this our vision our

stronger at completed Place, The which stand the with year project, XX%. has we anticipated. Charleston the track for to Premier student projections commence has XX% at on somewhat move-ins Apartments is been school topped will Virginia multifamily retail on continue The XX%. our side Hoffler Center Preleasing and the Greenside this Charlotte Beach coming on leased our weekend. lease the with and housing Construction Town at than in midtown XXX% is

will attracting terms We to facility a tremendous occupy in advantage also retailer have peers preliminary ground We the come a vast the retail which of majority its believe this give space. we over national expect students. floor convenience retailer the with will

XXXX As be In we the as housing opportunity second open semester. season Fall up we reported how last remains gear an in on project while under will site fall Charleston simultaneously event, quarter, take for Place for zone. project, researching preleasing construction any being the student Summit the we the the advantage of located best Meeting Street, might

and confident of will in underwriting We long-term this value the We posted keep develops. asset. remain you our this as situation

greater project where purchase discounted center loan market. the mezzanine final we and option, hold Square, a also the our The in lifestyle in development is Nexton Charleston a pipeline,

completion leasing next opened first occur Although the and year, final construction tenants won't handful at nearly this until XX%. early of quarter stands

and probably discounted we option use will to the proceeds and that XXXX a disposition for we project hold, asset mentioned the Exchange Due earlier mezzanine this purchase this from Tax-Free the structure I on some property. sales

majority our generation of our hard the development projects. delivered or our nearing is With team work pipeline of at underwriting next completion,

selected all-time most our at for rigorous an is committed standards. high, flow only underwriting remain discipline projects maintain that helps development. deal promising the to we Although This ensure to are

project in MSA. The This week announced million is development is $XX which new mixed-use the a Roswell, within area the we Atlanta located pipeline. in fast-growing Georgia our first

feet Post apartments downtown named of a feet in the the with of heart of XXX XX,XXX and retail, feature district, XX,XXX along parking. complex Positioned office square thriving structured Southern space, will

We next Collins, ground associates, in be partner long-term with break SJ our will early venture majority will a the year. joint and

with tenants significantly preleased the that space by time. be expect in and to We negotiations commercial retail are and office several

the infill assets of urban Post pipeline. projects indicative environments for submarkets on in will these very a long type that coming of to Southern be in our expect been months. time We high Mixed-use, new to is new to project opportunities and a walkability trend growth capitalize have announcements our the of strengthen. company centerpieces of fully and make and towards intend additional the the live/work/play hallmark continues

the both Recently is note at occupancy. apartments show reached upgrade Virginia Also, our reviews performance. performance at core rave The Encore Cosmopolitan from Apartments Beach. Center particular continues to the the units robust and the portfolio receive to the full tenants. Town multifamily Premier continues to Of

Newly are at refreshed same to leasing XX% a the unimproved premium units. apartments

a including the the new months, over several next tenants Center casual several market and With first growing region's the and fast retail in office arriving Shake Shack, destination dynamic restaurants, new to Town region. services remains

Brooks The construction building Market group continues quarter. and high Crossing level. at Creek a the completion of Mill office On-time the very highlighted to the perform at

and in continue completion Wharf to scheduled projects track also Interlock Atlanta. Wills We for the

gives the group. lending Offering portfolio significant reliance dates projects our controlling cannot to tenants mezzanine Similarly, thereby our on has us delivery construction of development investment of control pursue development confidence advantage partners markets reducing properties demanding well led peer the to the our strategy a mezzanine us meaningful cash over generation, gives value that process of to the to our as and The as growth. overstated. fund our construction capital be dependable

repeat timeframes selection clients are a income the years. of that by have construction enjoyed for in factor solidifies basis third-party team also we which large on a number fee our steady a Reliable

profit back-weighted on division new the the from year. starts the have The this ramp-up of several half second construction towards

phase. with at Third-party in potential preconstruction $XXX contract stands several engagements the new million backlog

to Hoffler and focus. for Armada this company strategies estate can first our our on an and create to employs foremost tenants have is Remember, been that essential multiple opportunistic primary These investors count years remain value. profitability and enhance XX real

As will of includes disposition well operate Unit development largest a OP the to business acquisitions, equity projects, model of purchase that holder, company's management and as options variety at-cost structures assets. deal continue stable as a

as XXXX on optimistic deliver of the multiyear well about company's promises as for We are extremely rest over our to timeframe. ability a our prospects the

we As that to creation the initiatives investors value our strongly future. to and undertake, XXXX well realize great to continue number we look will the intend begin of feel toward that into

Now I call will to over the Mike. turn

Michael O'Hara

Lou. Thanks

to our of balance highlights the sheet, want the our and cover I thoughts XXXX Today, quarter, guidance. on

The expectations. quarter. of $X.XX and the to mark difference share of the we FFO is lot to quarter, busy hedging was which met FFO relating have a our cover for This normalized reported per market our noncash a largest I morning the activities. This today. $X.XX between metrics to adjustments two second

core XX% the at remained office with operating retail XX% multifamily at for strong XX%. Our and quarter portfolio second XX%, at at occupancy

Same-store with NOI GAAP was positive positive. quarter NOI was XX%. This quarter significantly, the of More NOI same was positive and positive all property same-store consecutive NOI our was positive X%. store growth. NOI X.X% strong fifth types cash this is multifamily

housing majority XX-month bad student this are retail and where includes the to but of large item, $XXX,XXX, JHU The of debt to with due nearly stellar. even leases. the still transitioning XX% by were summer a our rents higher metrics increased increase recovery to occupancy relates The increase asset

X.X%. positive not cash positive The this spreads again with releasing tenant. metric quarter were retail includes X.X% one and but office only are GAAP spreads strong good, The this releasing

this of rent As to floor ground substantially valuable space metric. which is released we for renewal, more back this not we Fidelity Investments in reflected took part that

the and distributed front was is being been venture on City Duke have with the out this University quarter, by year. properties the to in acquisition Center anchored new joint Durham, to of We added Last and added active high-quality portfolio portfolio. One X our which WeWork,

to in XXXX quarter, second apartments Baltimore's the large we Point. our mezzanine Point the three added Harbor was portfolio. The in properties our During Street program initial project

which of ownership As mezzanine the at-cost part XXX% the require to first We be completed any option an for the not additional can capital. we have option building, phases. expect year, purchase exercised which ownership exercise the and X in next XX% of structure, for second will purchase option

the Hilltop. Units. Marketplace we representing OP Unit Baltimore. purchase The X.X a Beach, May $XX Red retail Commons million And with Street we was Mill owners Virginia aggregate This and in acquisition an $XXX building rate. lastly, was cap at office acquired In Harbor located million, receiving OP transaction Thames on the acquired price Point Wharf centers in

Purchase package. rate. this of the about page slide a a property is XX cap was $XXX price X.X supplemental representing There on million,

X waterfront adjacent the of As leased. other on Lou A XXX% the mentioned, this Stanley Point. Hopkins Morgan building property Johns building. Harbor is anchors XX% Medical our office and are Class This buildings occupying is to

had We these believe acquired remaining value. these for annual leases increases. acquisition assets, The high X asset with and an value is properties years The new average $XXX X.X% adds million. total overall include cost rent net these of market X.X below our approximately quality were and properties to of the

On front, of gross the profit construction $XXX had the million third-party of of company quarter million. At backlog the construction the segment reported on second in a we revenue the second end $X.X quarter, $XX.X million.

involved. a developer that at week Whole construction $X.X made loan as update program. XX in Interlock This The Atlanta Now year Foods the for successful off for of beginning The of we last very all outstanding well on months. and expected. our underway. mezzanine a the Decatur sold paid now profit an for asset a was center rate cap was was on attractive with activity began loan million projects an project

We end into well outstanding of XXXX. third anticipate funding to and the by expect balances fully the quarter remain the loans these

are be quarter. fourth loan Junction the still paid in We off the Annapolis to expecting

Our hold transaction. property from the currently a sale whether significant realize evaluating sales property sold market If or fees this is certain partner to could additional above refinance the and the term long is we for price, it. for

the be payoff. We the balance Annapolis this $XXX but to mezzanine of outstanding depending million temporarily Junction the range, higher on be expect the of timing total may program in

our turning Now balance sheet. to

capital Over the XXXX to we on have make past good our quarter, plan. continued progress

XXXX guidance February following year. the achieve Our to of in issued for leverage targets consisted the our

proceeds during sale Harris the which representing agreement Lightfoot and a will million, of month a $XX of executed rate. down Teeter We disposition the expected cap the $XX to First, approximately third a for used million, pay quarter. debt. purchase closing shopping be for grocery-anchored we center X.X of This for sale anticipate

Decatur the are off million. expect paid and we Annapolis payments expected this be Second, Whole loans $XX to center year. The Junction Foods approximately

this discussed, program just through expectation. raising ATM million I we $XX in the is As XXXX. anticipate still And third, the

price year favorable average next optionality million to quarter, of increase an at million be to at take the market raised of and conditions. an conditions of advantage market $X.X million We filing think price and $XX.XX. date Early week we Taking the $XX ATM to an to $XX.XX have will of advantage of flexibility during prudent average $XX we program. it's

Units During equity the the quarter, retail Beach the $XX acquired issuing Virginia in overall through centers to OP which leverage million our lowered which ratios. added

$XX In Thames million which equity first Wharf used addition, was acquisition. preferred we fund issuance $XX raised the of million through Street to our

will we source to year less our good common be permanent limited time. capital a is to a at equity. our over X.XX% our stack. was it decided per time cost now than We capital believe of think good while or a have fixed preferred to add preferred We capital which so XX% of of We equity expensive

for well-respected of in first invested We institutional the who also company investors time. the new a have number

are As we new Lou opportunities. development evaluating of number said, a

these Georgia. in The of Post is be first Roswell, to announced Southern

on therefore, We break construction little expect to investments and the first next XXXX. do capital the land not ground in in year expect XXXX. of beginning this close the we'll year, to We any quarter projects of require until with

additional leverage in Xx in and ratios. past EBITDA including and new We as sheet core package preferred balance the range. debt metrics metrics to with supplemental the reflecting the manage to mid coverage leverage several continue will We we in added have equity the

had outstanding consider not the credit outstanding as calculations million million to preferred including of core we will of end quarter, debt At of total the $XXX it equity. $XXX debt under million Our $XXX the we debt the EBITDA include revolving facility. core

the the details I'd being third updated of Now of loan Annapolis XXXX quarter; center the of anticipated like guidance through the to guidance. of sale Harris in raising expense Lightfoot $XX based are year-end. the $XX which Interest Junction in conditions. through fourth approximately go additional assuming the Teeter million program LIBOR The paid the total a assumptions off for X.X% quarter, calculated XXXX million market is the forecasts yearend the an the of at forward LIBOR $XX on by ATM curve, favorable by in million for proceeds

the includes of guidance purchase NOI new per interest Our general million the to million this million on share $X.XX normalized Total in per expense financing administrative adding range, $X.X the million is updated in third-party updated range; $XX.X $X.X G&A apartments the to including the in interest option income the Junction $XX.X the program $X.XX to mezzanine FFO $XXX.X construction discussed. predicated million officers from million million in amortization range. due million of $XX.X of $XX.X to gross the profit XXXX million $X.X which components. to employees new share to of following $XXX.X expenses $X.X million also quarter Lou increased Annapolis is in recognized and sale; net was range;

expense expense million $XX does quality enhancing on increase year, earnings million range, increasing not which XX% mezz this concentrating expected include million XXXX be in related an interest the and XX With to outstanding. $XX will shares and in portfolio focus program; our weighted to NAV. Interest for the

call to the I will Now Lou. turn back

Louis Haddad

Mike. question-and-answer session. Thanks begin now to we would like our Operator,

Operator

comes David first proceed with your Instructions] Please Rodgers Baird. question question. [Operator with from Our

David Rodgers

high-level Lou, turned that Obviously macro perspective at regarding favor. tide defense wanted your southern to back in start a now maybe has on maybe the in Virginia. level

starting region of that defense just kind you're obviously, activity but your Your Are pickup portfolio of seeing. just in is you more to to overall? a not completely the tied see

Louis Haddad

Yes.

the do we see We as lot It that mentioned, activity affect it doesn't the a retailers. and more region. in are in increases but restaurants you seeing directly us

seeing as there out this and advantage the that results lot of will positive grow of surge. But to a hopefully take little think of we're region result the buildup. a I continue

David Rodgers

into Wanted onto Obviously to list they of Durham, top move-in WeWork. now with the move tenant for office. kind in move your

pending them lease as got for two You've with or well another construction projects. new

you kind tenant to how of can and you exposure look talk office about more of with at just any exposure? comfortable you'd there, in even be So your overall space regard adding whether kind the

Louis Haddad

Sure. be of all kind Durham particular for the long-term is has share doesn't that kind track particular, market of any we that in want to to jury attitude one we have become don't partially fact in up vested want out to having particularly vie With WeWork generally. the tenants. too tenant, end much top project We We to the we sale, the have WeWork due probably credit the up that will record in most our for. one that of don't regard

same what have nearly well and tenant to according be looks XXX% caution, really is in their of though, the don't no to is Durham space At fantastic, through to particular activity we they reason get that strong. The numbers abundance really won't time we believe successful. leased, entrenched with an But too

Michael O'Hara

certainly thing on we'll other of is for foot. by on something that looking at looking in recently building with keeping be the feedback of the lower and fine the XXX% was lenders, which we're sold around WeWork as that WeWork Dave, they're $X,XXX as leased we're going building that XX% or at. a hearing it's financings was We've that from a long what's also the there been track and sales D.C.

I basis. cap market at rate certainly, a on guess is still positive, So least the

David Rodgers

that all guys. Appreciate detail,

to kind resolution about being to ask outstanding. lease? Dick's growth mid-single that's your and Dick's XXXX a still Lou, year. plan have the on digit a the lease space of kind about that talked of and wanted come What's you You for FFO

Louis Haddad

Town had Dick's at hoped As anticipated somewhat not and for, here renewing Center. will we be

of So the we'll space year. back at the first get the

is in able us I Center mentioned kind to of for to a do that opportunity been two haven't a something we great like unique this Town do. barbell. It's of ends last As quarter,

right one because office. Town like side style structure convert an rent as now the we offering the being in back On have is. to of can that it space as high don't Center support We

more the good bring with experiential some add are a spectrum, have type also certainly quality space which another At user could a the the to could office number that Town few hurt of conversations of the it now hundred we're other daytime Center. entertainment of center workers. that in end the doesn't to concepts and out So there

and XXXX, it's penny under that going to be So on all drag to our way redevelopment, options. for don't another evaluate we're a a time to we or going is than Dick's is be regard greater the little XXXX earnings. one income coming the to under, from so which With or from take somewhat expect project any building coming going

David Rodgers

on better how expectations NOI, volume relative for the guidance acquisition/disposition performance much Then with and of Mike, question anticipated? regard store much your change how core was to last that me, versus was to timing portfolio than same

Michael O'Hara

obviously acquisitions. piece ramps biggest $X.X quarter sorry, The add year the retail I'm the goes million earnings, Point in the Thames range. adding. centers is that on. Street X Certainly, as Street in NOI it $X.X million was million up. will like -- the as $X.X Wasn't the probably much as And in are

Operator

Our comes John proceed question. Please with next Guinee from your Stifel. with question

John Guinee

You and Southern months in of square guys When guess being the Roswell, unit it about picking retail that office, big which that's for downtown you of a been Roswell? a per number the in the at foot. ago. top XXX are out a few is for a for I maybe at square XX,XXX actually for busy. multifamily, $XXX a feet was XX,XXX price multifamily looking looks I strike like feet Roswell to come you particularly And Point, square just market. while as me point a market, Does you have garden-oriented

Louis Haddad

parking in also project, bit there's Remember, a so numbers the that higher. kind of that structured skews

at trade market. the small significantly It's great what's a of the in market. expect is the market, surrounding property not above top but We to the going tenant

you'd at people particularly down and they of see thousands there, were the all close you streets downtown, the when If for activity entertainment. come the evening

the meaningfully projecting. so. we're they're market, Like the high but I with we're end the So of rents say, comfortable not at

John Guinee

more on your bit development/redevelopment little a pipeline. just Then

you put correct? up will Durham you're that year. to Is Newton that acquire for next but sale Square going mentioned You

Louis Haddad

Yes.

John Guinee

next And basis then Can in the is, Charleston? with out your you soon? housing do get student the you what you question sometimes at think do guys

Louis Haddad

To But question, high-rise that doing Durham are I as mentioned that President Chief and the on seconded, Investment said, Asset Mike most the is probably is to first complete going and not Management your of our be like list. review Officer yet. I I will those sale a intent it's develop The trade believe Nexton that will be going to XXXX would. the be Square, would of other as -- be Nexton a trophy candidates one proceeds. the we asset of Exchange recipient

Really mentioned year. school to product. earlier, And guess we're building would I'm is it's That's for point. believers yes, fantastic to is we're comfortable regarding basis, ready we off the be I go next the that the the Like preleasing going this efforts great able that received. but at open. get here and through give We're out in not I project at our we're a Charleston, see market, fight to kick activity want up how month seeing strong to this

premium the bit So we're own our same cut it and that I at into not trade come out a simply turns to it get out if in even. a our funds still or opportunity as a of zone basis such appetite think losses an happy on, cost. it that to long-term, have we we are to going that We're to only created a to project mode

John Guinee

out happens modification half or any into surprised a still XXXX? a debt to original, got position the Junction. you've on you while question, with have that that mezz your of fees were Annapolis see that last all little of nothing and chance booking there Is deal continue bit you well to your Then loan debt,

Michael O'Hara

until a and is additional to we does. that that won't make know amount, it happen option is the sale So $X we the what's over for certain the being we November sale, the we it he it we going purchase million. year, sale If John, sells that if sold but booking goes are amortization of fees, if last what last recognize can That's amortized.

Louis Haddad

Yes, and and John, well. little not either that looks the is it's best leasing guidance. good those in in way, it really fees we're are It submarket, product But feeling project. fantastic, the about

So refinance stay that for we if do be happy to a in it turns efforts on piece, his so. we'd out

So regard. as counting a it win in either we're

John Guinee

year. Nice you. Great. quarter, nice Thank

Louis Haddad

South happening over peninsula I going market that in John. specifically neglected on the mention Hampton Dave's opened building Rhodes. mentioned the wanted great you, I Thank on to Liberty the News. didn't question regard and Newport to activity earlier what's the with at else mention mention on something What didn't XXX% we I was in Apartments. at what's I full. I to the here

considerable million redevelopment been hope some HUD activity relationship That the our expanding Newport two-carrier project, and that, uptick there's with probably about been shipyard News in recipient to as of continue well $XX months, a as their the continue of grant we a read several increases last that. to was at also, good Liberty have full have that occupancy so with people we're very new We've the pleased them. the about deal rent Apartments getting downtown the for

Next question?

Operator

question. proceed Our Stevenson from Rob Please your with next question Janney. comes with

Rob Stevenson

partnership public/private Duke? selling Does project with deals Lou, Durham assets. your your ability to impact you sell future do don't the normally

Louis Haddad

They I don't market new they into involved. to Durham. hopeful rent. term, number for goals be centerpiece we we believe a We've relationship. longer can are so. meeting downtown do building although at where bit succeeded in Duke including their the initiatives a the continue the We're have putting a hope is that in facility a of

good -- up of we or we we feel building feel irrespective about the good about end transacting it keep whether I no, So on it.

Rob Stevenson

that thinking of even if the year are you Then you guys sell the the about? back Mike, are? hold what the assets asset does at sales all on depending that issuance variable half ATM Or the is

Michael O'Hara

If Generally, be it. is trading won't. to the then we'll depending advantage the variable going stock on well, of not, It's if take market. we

think we closing. capital and going them projects, that thing by the through process in evaluating go that we're don't the other to on bringing is, be getting The XXXX, until the market time actually we the

Rob Stevenson

for Is there today? held anything sale

Michael O'Hara

this got and deposit We've went The only week. sale Lightfoot last Marketplace. thing purchase on hard that is agreement, the the

Rob Stevenson

of you rent following on on Other retail Dave's you have is Dick's, have than XX% Then any redevelopment next any might where question, plans? known rolling non-renewals? just under likely color other or year. material And up there your the assets

Louis Haddad

I This this those Dick's what hoping got time. back ask look think careful out Bed a were we for. to figure how so of to we I've the you it's one get said We and back we'll Bath don't best building it, going happen. at is like in get that so hopeful past now Beyond we're or it. utilize to does & the not that two, can but be

We things few have coming a up.

PetSmarts coming materiality any this up, of point. Bath Bed real three have & at another Beyond. We Nothing

renew, would in centers that so don't doing sales, if they expecting are good really to but place. enough small that renew, We're they feel great happen are what are about going these and in

the of a So us was keeping size close no, gives eye PetSmart, now. that thing only concern Dick's we're any right I think on.

and of But IPO that they everything future may cash. remains read in bricks to keeping that be the With that and the but from be would with seen. I've the somewhat Chewy, seen, expect they I are that downsizing. mortar. flush

Rob Stevenson

me. for one Then last

straight without are a mezz just doing you how to And versus lend at of deals for sort weighing how are Looking deals you lending are the purchase program, that guys option? attractive mezz the own?

Louis Haddad

us looking know of the great a that with to couple things A that for It's One, I want business on that partners expand we're and program. reiterate. to of trust. line not we

share for all to Secondly, if as get And our the we we essentially us of participation. through we're them. is economics own those projects going not at of can or whether the lion's the critical piece look

is a can the option purchase manifest going then couple a something And of Where to won't ways. won't because trade substantially our below that product cost discount to capital, work of of in partner. different be at that fair itself our

one So they're hope place underwrite of We're to it if cost the with and because them going bringing going comfortable real in strength expertise is of it I we where the we a the participation own negotiate sheet. of be our with would on and comfortable on on we're value we just the either balance as to estate sell open where simply that's because to your the free partners. those intent mezz trade be, that option in answers that that Where product the our discounted and will interest. purchase underwriting. these of feel be the two, getting were that and market question. We return

Operator

question Jamie comes from of next proceed Our question. with with Feldman America. your Please Bank

James Feldman

the mark to you forward, market just noticed talk the do quarter. market in spreads that just mark drove your assets? how then portfolio what office negative Can you about to going the on the of office or leasing think and about I

Louis Haddad

X-year transaction all floor tenant where was some which As was in is ground we valuable turned back a the in want together, Jamie, that, Mike the to to of the GAAP rent getting basis. renewal pool. there rate Fidelity that Investments XX% one space entire space. on say that the was increase It's I of they had mentioned at that only a the I basically If part renewal positive it around Institute negotiation Art And and paying. that was put AI a leased about to

is The a on the the puzzle AI extension, on range other we $X.XX somewhere of that. that piece in spent foot

more spend to that choice not considerably dollars so space. for And rent renew and upstairs the on higher was

that all itself that. It's positive metric in is transaction that for mentally can't So us. just the show

above have we've the XX-year or Town at market. those Not the here is to are larger What the XX With mainly somewhat office after seen on terribly it's Center. escalated spreads, tenants that the a current period regard so. rents

negative And again, so. not typically so But renew, positive on on basis we slightly cash basis. we're materially a and GAAP when a

James Feldman

mean sales next considering just about then market a position Or weight throw for you'd as think year, like Baltimore. there? do is that, your you you be growing JVs shrinking your is that to sales? actually I either picture And continue in bigger you or down

Louis Haddad

well and question. We comment country. am direction Point. on I are about their get in like inner I our how in Harbor pretty know Baltimore want documented right there. to and position And in to of really people facing like against Harbor little turn But the I it bet much our really and city cities are East the issues Baltimore couldn't a the of are lot talk Inner and this lot that's going passionate they The are I and that a in determined qualified to I more detail. them. wouldn't issues We out. appreciate about to facing try a explain downtown great bit the

had the that including a growing feet the four We've the rates of that are that we the we've square a growing tell full, are Four century. hotels commands Marriott, entire of office X highest XXXX. par the we've since can the that can square amount in stabilized, renewal you built the presence built We've you real estate tell are headquarters buildings that you the I basis. built a there what region. all of vacancy $X.XX over and quarter least the in rents rev $X.X I built, Seasons last approaches I apartment worth billion tell that has on can foot. approaching million and a space over

and what's at growth Harbor We out. very trend part of feel the think a haul. a intend of keep the nice there years about We establishes trend long Inner be over XX it and that good to we we building on really intend Harbor Point. going to

James Feldman

partners think owned XXX% capital a hedge Would you bring be you though to little Or will bit? grow? your you this interest as in no, all

Louis Haddad

things we upside. owned. issue in on It's up there. a us, of to to whether partner will Right pace But partner. way partner. the of puzzle be with much of advantageous there, with a are just now, A develop some in the bring want the it's we the bring I matter depend capital an it trading XXX% And pieces lot of to think can give the if remaining don't will again, of our to a it's

said, I in relocate a know seeing tenants seen the activity to market few and last stopping. great now looking the But is we've there like we're it building years, We're Wharf Wills on that project that see we large over we don't the XX it in future buildings.

gives The out there. multifamily. a concerned other much But more Avalon is only of and location me people our believe have including concern Bay lot bit I a I'm this that anything in piling of about pretty thing discovered gem that little trumps people

James Feldman

you comments hires the just as hires, COO or I whether your And beginning done think other longer, will about some a but the you at on? of just appreciate do then you know of what the talk call Kind this of focused the being Can the you think lately. for will more the about you've they here? kind what's about company? next, about you larger years, much I the said the X place in even envision as management of vision team be

Louis Haddad

we ago Our knitting, X and years honest did stuck previous we had X been with people our that real we decades was initial to stayed vision if for it that estate opposed that take billion retain could shareholder. we public the when and X to And doing able and position market in $X to the people, people as are REIT period. we what and a $XXX largest were as X-year to as million cap turn we into our still became achieve

development order added, that we more experience. from with. we that. got go need we help we we've needed some experience $X in that felt we're is some that in billion. some incrementally goal now that externally do need $X internally in we've league And to got REIT additional We've that and great which partners Our And to billion management we more

going release focused. a COO a expert. our management is We press be out on to have He's more hope inwardly soon to who

for As the of be around far rest put than that meant the good that. end of wouldn't I health. to hopefully I years a more say given many being on and period at years, to least five five as going it's us

keeping both this state Place as all having and go appreciate and it are and We've a good And it's to we I bigger making won on the really comment, local to us, the a better. level and the good a awards We're team been Best fun, as going feeling systems about has well as several Work But level. lot of future. market intend on Jamie.

Operator

to At call this to Haddad for time, comments. Mr. I would back over turn the closing like

Louis Haddad

Take interest your updating we company to the in Thanks, our our care. you look coming and on really quarters. We everybody. in appreciate activities and results forward

Operator

today's Thank you, does conclude teleconference. this

You may disconnect lines your great a time this at day. have and

Armada Hoffler Properties (AHH) 3 Aug 192019 Q2 Earnings call transcript