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February 2018


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


By Stonegate Capital Partners

DALLAS, TX / ACCESSWIRE / February 26, 2018 / Armada Hoffler Properties, Inc. (NYSE: AHH).


Armada Hoffler Properties, Inc. (NYSE: 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.


Armada Hoffler appears capable of delivering sustainable, low-risk growth to investors through its diversified real estate portfolio, which includes a healthy development pipeline.

  • The company’s operating portfolio consists of approximately 4.4M rentable square feet and approximately 1,300 apartment units.
  • AHH has dependable cash flow created by occupancy in excess of 94%.
  • AHH reports successfully developing over $1.6 billion of commercial real estate since inception and delivering ~ $264 million of projects since its IPO in 2013; the company had ~$484M in the development pipeline as most recently reported.
  • 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 pure-play acquirers of income-producing properties.
  • Its construction business gross profit was $7.4M in FY 2017, and management guides to $4.4 – $7.5M annual gross profit for this segment in 2018; AHH reported $49.2M in its construction backlog as of 12/31/17.
  • The company constantly re-evaluates its properties and disposes of non-core assets when identified so that capital can be redeployed; for example, AHH recently closed on the sale of 2 of its build-to-suit state office buildings, recognizing an approximate 40% profit margin upon delivery, and these proceeds were being used to partially fund the purchase of the out-parcel space at Wendover Village in Greensboro, NC, for $14.3M, which complements nicely a previous nearby purchase.
  • AHH reported a normalized FFO/diluted share of $0.23 and AFFO/share of $0.19 for Q417; at $13.47, the dividend yield is 5.6% on the most recent quarterly dividend paid of $0.19, and on 1/22/18, the company announced a 5.3% increase in its first quarter 2018 cash dividend to $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 midpoint of our estimated NAV per share range of $14.25 – $15.89. See the full report for details.

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

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

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