In This Article:
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Armada Hoffler Properties Inc (NYSE:AHH) reported a strong first quarter with normalized FFO of $0.25 per diluted share, slightly above expectations.
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Portfolio occupancy remained high, with a minimum of 95% over the past four quarters, and office assets were nearly fully occupied at 97.5%.
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The company achieved double-digit GAAP renewal spreads in both office and retail segments, with a blended 2.6% growth rate for new and renewed multi-family leases.
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Armada Hoffler Properties Inc (NYSE:AHH) successfully reduced general and administrative expenses by 13% year over year, demonstrating effective cost management.
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The company maintained strong liquidity with over $211 million available, and completed a hedging transaction to mitigate interest rate volatility.
Negative Points
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The construction pipeline has slowed due to macroeconomic uncertainties and tariffs, impacting some projects for the remainder of the year.
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The company had to reset its quarterly dividend to $0.14 per share, a difficult decision made to ensure long-term value creation.
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Retail headwinds included closures by tenants such as Party City, Con, and Joanne Fabrics, although there is tenant interest in these spaces.
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The company faces potential risks with upcoming lease expirations, such as Office Depot in Durham, which may not renew.
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Some multi-family units are offline due to necessary improvements, impacting occupancy and requiring phased work over the next 10 to 12 months.
Q & A Highlights
Q: How has macroeconomic uncertainty and tariffs affected your office or retail leasing conversations? A: Sean Tibbett, CEO and President: The macroeconomic uncertainty has primarily impacted our construction pipeline rather than our office or retail leasing. We have been actively executing new and renewal leases, and our portfolio activity remains strong. While new construction starts may be softer, our portfolio's value continues to shine, allowing us to maintain guidance despite some softness in construction.
Q: What are your thoughts on future investments in mixed-use communities and office spaces? A: Sean Tibbett, CEO and President: In the short term, both dispositions and acquisitions are challenging due to market uncertainty. However, we are well-equipped to operate and develop mixed-use communities, which we believe drive value. While we are comfortable with our current office spaces, we are not rushing to acquire new office properties. Our focus remains on mixed-use ecosystems, which are our core competency.