Good morning, ladies and gentlemen, and welcome to the Amanda Hoffler 2025 Earnings Conference Call. This call is being recorded on Tuesday, August 5, 2025. I would now like to turn the conference call over to Chelsea Forrest, VP of Investor Relations. Please go ahead.

Good morning, and thank you for joining Armada Hoffler's Second Quarter 2025 Earnings Conference Call and Webcast. On the call this morning, in addition to myself, is Shawn Tibbetts, CEO and President; and Matthew Barnes-Smith, CFO. The press release announcing our second quarter earnings, along with our supplemental package were distributed yesterday afternoon. A replay of this call will be available shortly after the conclusion of the call through September 4, 2025. The numbers to access the replay are provided in the earnings press release. For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, August 5, 2025, and will not be updated subsequent to the initial earnings call. During this call, we may make forward-looking statements, including statements related to the future performance of our portfolio, our development pipeline, the impact of acquisitions and dispositions, our mezzanine program, our construction business, our liquidity position, our portfolio performance and financing activities as well as comments on our outlook. Listeners are cautioned that any forward-looking statements are based upon management's beliefs, assumptions and expectations, taking into account information that is currently available. These beliefs, assumptions and expectations may change as a result of possible events or factors, not all of which are known and many of which are difficult to predict and generally beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations, and we advise listeners to review the forward-looking statement disclosure in our press release that we distributed yesterday and the risk factors disclosed in the document we have filed with and furnished to the SEC. We will also discuss certain non-GAAP financial measures, including, but not limited to, FFO and normalized FFO. Definitions of these non-GAAP measures as well as reconciliations to the most comparable GAAP measures are included in the quarterly supplemental package, which is available on our website at armadahoffler.com. I will now turn the call over to Shawn.

Good morning, and thank you for joining us as we review Armada Hoffler's second quarter results and share our perspective on the path forward for the remainder of 2025 and beyond. Our portfolio continues to deliver consistent NOI growth, underscoring the strength of our assets and the discipline of our execution. In parallel, we are making meaningful progress on enhancements to the balance sheet, supporting long-term growth and flexibility. We are committed to our strategic foundation, which is quality, a company value that guides how we operate and allocate capital. We're focused on maintaining a high-performing portfolio, optimizing property level performance and margin through operational excellence while delivering reliable results quarter after quarter. The second quarter results were solid across our portfolio. As outlined in our release, we delivered normalized FFO of $0.25 per diluted share, supported by consistent performance in office and retail. Office occupancy remained high at 96.3% with positive re-leasing spreads of 11.7%, while retail occupancy was 94.2% with renewal spreads of 10.8%. Multifamily experienced a modest dip in occupancy to 94%. Overall, portfolio occupancy remained healthy, averaging at least 95% for the fourth consecutive quarter. Property level income continues to outperform our 2025 guidance. As we outlined last quarter, we adjusted our expectations for construction activity this year, and we remain in line with those updated projections. I will remind you of our strategy to shift away from reliance on fee income and toward higher quality recurring property level earnings in the coming years. Therefore, we are reaffirming full year guidance. We believe that our focus on property income derived from the best properties in the market should benefit shareholders in terms of value and share multiple as the equity market recognizes our shift away from mezzanine financing deals and fees for service. We believe the market rewards property level income, which clearly deserves a higher value recognition. On the capital front, we successfully completed our first debt private placement in July, raising $115 million. This transaction marks a significant milestone in balance sheet management, increasing financial flexibility while reducing interest rate risk. The demand and oversubscription for this issuance reflects confidence in our portfolio quality and long-term strategy. We are grateful for new long-term capital partnerships with these institutional investors. We look forward to expanding relationships with credit investors such as life insurers and major banks. Matt will go over more details later in the call. Our retail portfolio continues to perform well. We've successfully backfilled former big box vacancies from tenants like Party City, Conn's, Joann's and Bed Bath & Beyond with stronger, higher credit retailers such as Trader Joe's, Boot Barn, Golf Galaxy and others at a weighted average of 33% higher rents. This success reflects our ongoing focus on optimization of tenant mix, targeted reconfigurations and proactive leasing strategies. With limited new big box development nationally, we remain well positioned to capture demand for infill retail space and drive long-term value across the portfolio. I will highlight a few of these transactions. At Southgate in Colonial Heights, Virginia, we executed a LOI to downsize Burlington and create space for a national sporting goods retailer, also under LOI, therefore, backfilling Conn's. This reconfiguration would drive almost 40% rent increase and enhance tenant quality at the center. At Columbus Village, adjacent to Town Center of Virginia Beach, we are pleased to confirm Trader Joe's as the anchor grocer for the former Bed Bath & Beyond space. Trader Joe's will be joined by Golf Galaxy with both expected to open by early 2026. We expect to grow rents by nearly 60% over what Bed Bath & Beyond was paying. These additions further elevate the area's retail appeal and support the 130,000 residents within a 3-mile radius and our 760 apartment units at Town Center. Subsequent to the quarter, at Overlook Village in Asheville, we leased the former Party City space to Boot Barn at over 60% leasing spread and assigned the Joann lease to Burlington through the bankruptcy process, avoiding downtime and preserving rent. These changes enhance merchandising profile and strengthen the tenant mix alongside anchors like T.J. Maxx, HomeGoods and Ross. Southern Post in Roswell, Georgia, a Northern Atlanta suburb, continues to grow into a dynamic walkable destination that brings together residential, retail, dining and office uses in a highly curated environment. Since last quarter, all the restaurants have opened, adding energy to the street-level experience and contributing to a steady increase in activity. We've also focused on activating the Central Plaza with community-driven events such as live music and local markets, reinforcing Southern Post's role as both a neighborhood amenity and destination. Interest in the remaining office space remains healthy, supported by the vibrant mixed-use setting and the strong demand we continue to see for well-located, experiential environments. Our office portfolio remains essentially full at 96% occupancy with minimal vacancy and continued demand for the limited space that remains. The primary driver of the quarter's occupancy change was the return of a WeWork floor at One City Center in Durham, North Carolina, which we had previously communicated. Including this giveback, we were able to maintain high occupancy across the portfolio, and we're seeing interest in the space. Notably, less than 4% of our office space expires in 2026, providing strong earnings visibility and minimal near-term backfill risk. This stable performance reflects our strategy of owning office assets within amenity-rich, mixed-use environments, locations that continue to attract and retain tenants in today's hybrid work landscape. Recent trends reinforce this strategy. A recent Fortune article highlighted that 54% of Fortune 100 companies have now returned to fully in-office work, up from just 5% 2 years ago, with hybrid models declining to 41%. Reflecting this dynamic, we're seeing interest from firms relocating from the aging suburban office parks or hollowed out downtown cores to more engaging high amenity environments. Town Center Virginia Beach continues to draw employers valuing walkable access to dining, retail and residences. Harbor Point in Baltimore has experienced the same trend. Since the opening of the new T. Rowe Price global headquarters, which was intentionally located there for these very reasons, retail sales at Harbor Point have increased by over 20%, reinforcing the long-term value of our placemaking strategy. The Wall Street Journal recently highlighted research from ADP that once again listed Baltimore as among the very best metros for recent college graduates based on high wages, a very strong hiring rate and affordability. In Baltimore, college graduates are landing jobs with top national firms in the financial services, technology and health care sectors. And within Baltimore, we believe that the new Harbor Point submarket is the epicenter of that trend with major financial and professional service tenants like T. Rowe Price, Stifel, Franklin Templeton, EY, Transamerica and Morgan Stanley anchoring our office space. This growing cluster of high-quality employers are attracting top-tier talent who value having a short walk to great waterfront restaurants, retail and residential options. Our multifamily portfolio maintained solid fundamentals, delivering occupancy of 94%, a modest decline from 95% in the first quarter. The dip in occupancy was driven in part by seasonal turnover at the Edison and Smith's Landing as well as supply and demand pressures tied to the broader macroeconomic environment and shifts in federal funding, factors that have a heightened impact on properties located near universities. However, I am pleased to let you know that we are now 95% leased at Smith's Landing. Renewal leases in the quarter grew by 4.8%, while new leases increased by 2.8%. These positive trends extended into July with spreads continuing to improve at a blended 4.3% for July, underscoring the underlying demand in our key markets. Notably, Chandler Residences at Southern Post transitioned to our stabilized portfolio during the quarter, contributing to the strengthening of our asset base. In Harbor Point, Allied, the newest multifamily building, is leasing ahead of schedule at 68% leased as of July 20. We continue to see strong demand for this premier waterfront location within the mixed-use community. At the same time, we're maintaining a disciplined approach to balance lease-up velocity at Allied while monitoring potential impacts to occupancy and rent growth at our other Harbor Point multifamily assets, 1405 Point and 1305 Dock Street. At Greenside in Charlotte, construction is now underway on the improvements we outlined last quarter. These enhancements were prompted by water intrusion that affected several units, and we're using this as an opportunity to improve the building. Work is progressing in phases, and we will continue over the next 10 to 12 months with a portion of units remaining offline during this time. Given Greenside's prime location in Midtown, less than a mile from the new Carolinas Medical Center and Pearl Innovation Medical District, we remain confident in our ability to generate long-term value from this asset. We are also actively evaluating opportunities within our real estate financing platform, including the potential to bring two high-quality multifamily assets, The Allure and Gainesville II onto our balance sheet. The Allure, located in Chesapeake, Virginia is currently 93% leased and continues to benefit from strong leasing momentum. The property is situated in a market with stable fundamentals and desirable demographics. Within a 5-mile radius, average household incomes exceed that of downtown Atlanta and the area is served by some of the highest rated public schools in the region. Gainesville II is approximately 97% leased and sits adjacent to our existing Everly multifamily asset, about an hour north of Atlanta. This proximity enables us to capture operating efficiencies and economies of scale by managing the two assets together. We expect bringing these properties onto our balance sheet will contribute additional recurring NOI and further enhance the quality of our portfolio. We remain focused on value creation through disciplined execution. As we move through the second half of the year, we are well positioned to benefit from continued execution across the portfolio from retail leasing and office occupancy consistency to the stabilization of recently delivered assets. I will echo my sentiment from the last call. We are building a stronger, simpler and more resilient Armada Hoffler, one that is more efficient, better balanced and capable of generating consistent, reliable earnings growth over time. I'm proud of the momentum we have generated, and I am confident in the team's ability to deliver sustained, predictable earnings growth while enhancing shareholder value. I'll now turn the call over to Matt.

Good morning, and thank you, Shawn. Armada Hoffler delivered another solid quarter, reflecting the strength of our mixed-use portfolio, the resilience of our operating platform and the continued execution of our financial strategy. With signs of renewed momentum across the real estate sector and tenant demand broadening, we are executing with focus whilst positioning the business for long-term growth. For the second quarter of 2025, normalized FFO attributable to common shareholders was $25.4 million or $0.25 per diluted share, in line with our expectations and guidance. FFO attributable to common shareholders was $19 million or $0.19 per diluted share. AFFO came in at $18.4 million or $0.18 per diluted share, reflecting continued alignment between our operating cash flows and the restructured dividend. Same-store NOI increased 1.4% on a GAAP basis and lost 0.3% on a cash basis. Subsequent to the end of the quarter, we achieved an important milestone by successfully executing our first-ever private placement bond issuance, raising $115 million across 3-, 5- and 7-year tranches. This targeted transaction was met with institutional demand and priced with a blended interest rate of 5.86% and a weighted average term of 5.3 years. A portion of the proceeds from the private placement were used to repay the construction loan secured by Southern Post and a portion of our credit facilities, and the remaining proceeds will be used for general corporate purposes. This financing advances the three core pillars of our capital strategy, quality. We are transitioning our balance sheet towards fixed rate, long-duration capital without reliance on derivative instruments. Several years ago, we targeted a reduction in our weighted average cost of capital through deleveraging and earning an investment-grade BBB rating on our balance sheet elements. That is not easy given where we began, and we are not claiming total victory, but we have moved a long way on that path with our rating and this transaction being good examples of what discipline can produce. Discipline. The proceeds we used to pay down shorter-term high-cost facilities, improving cash flow visibility and volatility from variable rate debt. While somewhat dilutive, it's again the right strategy, aligning our balance sheet assets and capital duration despite the near-term earnings mentality that often drives REIT management decisions. Simplicity. We are continuing to streamline our capital structure, improving the foundation of our investment-grade metrics and long-term strategic flexibility. This follows the work we began in the first quarter of this year, including the hedging transactions on $150 million of notional exposure and the Board's decisions to right-size the dividend to a sustainable level. Taken together, these steps provide the right foundation for stability, strategic optionality and sets the business up well for consistent shareholder returns through the cycle. As of June 30, 2025, net debt to total adjusted EBITDA stood at 7.7x. Stabilized portfolio debt to stabilized portfolio adjusted EBITDA stood at 5.2x. We maintained total liquidity of $172.2 million, including availability under our revolving credit facility. AFFO payout ratio stands at 77.8%, and after adjusting for non-cash interest income, the ratio was at 97.2%. Our unencumbered asset base remains strong, supporting both balance sheet flexibility and long-term borrowing capacity. As I mentioned last quarter, we continue to be rigorous in our approach to expenses. G&A for the full year is projected to be materially reduced year-over-year, consistent with our commitment to aligning costs with the current scale of our business while preserving the resources necessary to execute on our strategy. The capital markets remain selective, and we are structuring our balance sheet to reflect that reality. With our debt private placement complete, our liquidity intact and exercising the 12-month extension option on one of our term loans, we have the ability to remain patient and disciplined as the cycle evolves. We are reaffirming our full year normalized FFO guidance of $1 to $1.10 per diluted share, supported by stable operating performance, which will overcome the updated third-party construction projection and a simplified capital base. With that, I'll now turn the call over to Shawn for his closing remarks.

Thank you for joining us today and for your continued interest in Armada Hoffler. We remain focused on delivering strong operational performance and driving long-term value for our shareholders. As always, I want to recognize our dedicated team for their hard work and commitment. We look forward to keeping you updated on our progress in the quarters to come. Operator, we are now ready for the question-and-answer session.

Your first question comes from Viktor Fediv from Scotiabank.

I'd like to ask about your decision to maintain guidance, which now implies a pretty wide range of $0.50 to $0.60 for the second half of 2025. So can you provide some details on potential scenarios that would lead to AHH achieving the lower or upper end of this range?

Thank you, Viktor. Yes, obviously, we take a hard look at this, and we maintain kind of a fixed eye on this model. We think that the range is appropriate. We do have, as you know, and as we mentioned, the asset Allied in Harbor Point coming online and leasing up ahead of schedule. So we think that provides some upside. Certainly, there are headwinds in the market broadly. But given the slight increase in the guidance on construction as well as the Allied, we think it's prudent to maintain guidance and look for that upside. In terms of downside, certainly, as I said, there are things out in the market that we can't control, but Matt and his team have done a nice job getting the balance sheet in a position to defend against fluctuations in the interest rate market. So I think we're in pretty good shape. And Matt, anything you want to add?

No. The only item that I would always caution when we're forecasting is the general construction work that we do as that is a kind of percent complete work, as those projects ebb and flow over their life will depend on when the timing on booking that work can be recognized.

Yes, I believe we have some upward opportunities and a quicker lease-up, which is part of why we increased our position in the asset at Harbor Point. Overall, we feel confident about the range and the midpoint.

Got it. And then just a quick follow-up on this new office floor vacated by WeWork. Just trying to understand the potential downtime. For example, if you decide to subdivide it into smaller units, what it might be in terms of downtime?

The team did a great job negotiating the reduction with WeWork. They are still occupying one floor, which leaves us with 31,000 square feet available. We predicted this back in April 2024, and we are fortunate to have consistent rent payments for this quarter. We are in the early stages, as we have just received the space back. There is an internal staircase and some structural improvements that we need to address. From a marketing standpoint, we are still in the early phases, but we can certainly consider dividing the space. We hope to find a user for the entire floor, but it's too early to make any definitive statements; however, we do have some interest and will keep working on it.

And your next question comes from Jana Galan from Bank of America.

I was wondering if you could maybe provide some cap rates around your expectations for the multifamily asset acquisitions and then the cap rate expectations for the disposition that you have now in guidance?

Sure. Let's start with the multifamily. I think that we should be thinking about 6-ish for the multifamilies combined. As I mentioned in my comments, we have an opportunity to create synergy between the assets there in Gainesville. One of them is 184 units and the other is 223 units. So we have an opportunity to run them together should we choose to transact. So we think that creates additional upside and additional efficiency there in Gainesville. In terms of the disposition, we've got 100% full asset there that we've owned for about 10 years. And it's about 50% office, 50% retail. And we think that the pricing is in the mid-6s. So the good news is two things. One, the right real estate decision could be to sell that asset because we would have a significant gain over the basis, especially given it's 100% full. If that is the case, we will, if it is the right choice, transact and redeploy those capital dollars somewhere that makes accretive sense, right? So I think I look at the two as two separate business cases, although they could come together as one. But I think our view is can we make a deal that's accretive relative to our private placement kind of benchmark, which is at the 5.83 level, and that's kind of how we view this.

Your next question comes from Rob Stevenson from Janney.

Matt, you used the unsecured notes to repay Southern Post and the line. How are you thinking about the upcoming maturities of The Everly Encore and the TD term loan?

Yes, certainly, Rob. So first of all, as you would recall from my remarks, we have actually pulled the extension option on the TD term loan already back in May. So we have another 12 months on that. So we've kicked that can for another year. The Everly has a 12-month extension option. We do have some flexibility there. We're actually seeing some fairly constructive rates in the Freddie and Fannie markets there. Some of the Lifeco money is actually around 5% to 5.25%. So that's a pretty good cost of debt for us in current market conditions. And then to further look forward with the flexibility of the debt private placement market, the maturities for 2026 will be a combination of bank loans of maybe some Lifeco money on the fixed rate debt or potentially another private placement issuance. So we are currently with the team working through making sure we get the right maturity ladders through that. And as we kind of in earnest, really get into the meat and bones of this balance sheet transition to reduce that reliance on the derivative products and move away from the variable rate debt.

Okay. That's helpful. And then when you guys think about the Allied Harbor Point leasing up and any other sort of EBITDA enhancements that you guys are going to pick up in the back half of the year earnings-wise, where are you expecting to finish 2025 from a leverage metric perspective at this point?

Yes, that's a good question. You might have noticed that our net debt leverage metric increased a bit this quarter. This was due to the Allied acquisition, which included a $90 million loan that we refinanced when it was added to our balance sheet. As EBITDA continues to improve, we anticipate that the metric will decrease to the 7.4x to 7.5x range by the end of this year. However, this will depend on how quickly we can stabilize both Allied and Southern Post. I would advise caution when considering these predictions, as the capital structures of certain assets in our mezzanine portfolio, which Shawn mentioned could come online, will influence this as well. Nevertheless, we are committed to reducing our leverage over the long term and adjusting both the quality and the amount of debt on our balance sheet.

Okay. Lastly, Shawn, in addition to the 50-50 office retail asset that you mentioned may be sold, what are you and the Board considering regarding other strategic sales in the next 6 to 12 months? Are there specific dollar value targets you are focusing on? Additionally, how are you approaching the balance between selling apartments to reinvest in apartments, selling retail, and offloading individual assets like the South Bend property? How should we interpret your plans for selling assets in the coming year?

Thanks, Rob. Yes, I think to answer your first question, there's not necessarily a target, but there is what we view this internally as is there an ability to isolate kind of dislocation in the market, right? And if an asset is at or near 100% leased, as you saw us do in the end of last year, in the end of 2024, and we believe the upside is limited and there's an attractive price to be had, we think the appropriate move is to take our chips and invest them where we can grow, i.e., in a grocery-anchored center or otherwise that has a little bit of upside. And I think, again, there's not necessarily a target, but we are reviewing the list of assets that we own, i.e., the capital that we can control and looking for opportunities to lever a little bit of upside in that transaction. So yes, I don't think there's a specific formula other than where do we see dislocation in the short run and can we take advantage of that.

There are no further questions at this time. I will now turn the call over to Mr. Shawn Tibbetts to close. Please go ahead.

Thank you, operator. I just want to say thank you again for your interest and your willingness to participate in this journey with us. Thank you to our employees, our investors, our new investors, all the folks who support us throughout this journey. Again, thank you for your time this morning, and we look forward to updating you in future calls and future quarters.

Ladies and gentlemen, this concludes today's conference call. We thank you very much for your participation. You may now disconnect. Have a great day.