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Stonegate Capital Partners Updates Coverage on Armada Hoffler Properties, Inc. (NYSE: AHH)

DALLAS, TX / ACCESSWIRE / August 16, 2018 / Armada Hoffler Properties, Inc. (AHH)

COMPANY DESCRIPTION

Armada Hoffler Properties, Inc. (AHH), was originally founded in 1979 and today still operates as a full-service real estate company. AHH develops, constructs, owns and manages high quality, institutional grade office, retail and multi-family properties throughout the Mid-Atlantic and Southeastern regions. The company is incorporated in Maryland and operates as a real estate investment trust (REIT) for tax purposes. AHH is headquartered in Virginia Beach, VA, where its flagship property Town Center is also located.

SUMMARY

Armada Hoffler has demonstrated its ability to deliver sustainable, low-risk growth to investors through its diversified real estate portfolio, which includes a healthy development pipeline. With May 2018 marking five years since the IPO, it is notable that AHH has almost tripled its market cap over that timeframe, growing earnings, NAV and dividends annually, with a total return in excess of 75%.

  • The company's operating portfolio consists of approximately 4.5M+ rentable square feet and approximately 1,200+ apartment units.
  • AHH has dependable cash flow created by occupancy at ~ 95%.
  • As last reported, AHH had delivered ~ $264 million of projects since its IPO in 2013; the company had ~$605M in the development pipeline as reported for Q218.
  • With its internal construction team and developers, AHH can manage costs and timing on projects, creating immediate equity when taking properties online at an estimated 20% spread; this factor not only gives the Company several advantages in the marketplace but also significantly differentiates AHH from other publicly traded REITS operating as pureplay acquirers of income-producing properties.
  • Its construction business gross profit was $7.4M in FY 2017, and management guides to $5.6 - $6.4M annual gross profit for this segment in 2018. AHH reported $37.9M in its construction backlog as of 6/30/18 but has stated the expectation for this number to increase over the upcoming months.
  • The company constantly re-evaluates its properties and disposes of noncore assets when identified so that capital can be redeployed; for example, AHH closed on the sale of 2 of its build-to-suit state office buildings in Q317, recognizing an approximate 40% profit margin upon delivery, and these proceeds were used to partially fund the purchase of the out-parcel space at Wendover Village in Greensboro, NC, for $14.3M. Management most recently announced the sale of the Wawa outparcel at a 5.4% cap rate in Q218, with the sale proceeds utilized for balance sheet purposes.
  • AHH reported a normalized FFO/diluted share of $0.24 and AFFO/share of $0.21 for Q218; at $15.59, the dividend yield is 5.1% on the most recent quarterly dividend paid of $0.20.

We believe that AHH offers a well-diversified real estate investment opportunity for the marketplace, with a current share price trading well below the $15.99 midpoint of our estimated NAV per share range. See the full report for details.

The full report can be accessed by clicking on the following link:

http://stonegateinc.com/reports/AHH%20AUG%202018%20Final.pdf

About Stonegate Capital Partners

Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.

SOURCE: Stonegate Capital Partners