Armada Hoffler Properties, Inc.

Good morning, ladies and gentlemen, and welcome to the Armada Hoffler second quarter 2023 earnings conference call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, the 3rd of August, 2023. I would now like to turn the conference over to Chelsea Forrest. Please go ahead.

Good morning, and thank you for joining Armada Hoffler's second quarter 2023 earnings conference call and webcast. On the call this morning, in addition to myself, is Lou Haddad, CEO, Matthew Barnes-Smith, CFO, and Sean Tibbetts, COO. The press release announcing our second quarter earnings, along with our supplemental package, were distributed this morning. A replay of this call will be available shortly after the conclusion of the call through September 3, 2023. The numbers to access the replay are provided in the earnings press release. For those who listened to the rebroadcast of this presentation, we remind you that the remarks are made herein are as of today, August 3rd, 2023, and will not be updated subsequent to this 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 guidance and 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 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, and our press release that we distributed this morning, and the risk factors disclosed in the documents we have filed with and furnished to the SEC. We also discussed certain non-GAAP financial measures, including, but not limited to, FFO and normalized FFO. Definitions of these non-GAAP measures, as well as the reconciliations to the most comparable GAAP measures, are included in the quarterly supplemental package, which is available on our website at armadahoffler.com. I'll now turn the call over to Lou.

Thanks, Chelsea. Good morning, everyone, and thank you for joining us. Today we reported earnings for the second quarter of $0.32 per share, in line with our expectations and consistent with our four-year guidance. As you can see from our press release, the portfolio continues to deliver positive growth in same-store sales and releasing spreads, while maintaining company-wide occupancy over 97%. We continue to prove that best-in-market properties yield impressive results in most any economic climate. Sean and Matt will give you the details on the quarter, as well as the current state of operations and financial metrics. I'll give you an overview of a few longer-term initiatives we intend to pursue over the next 18 to 24 months. For years, we have been describing the advantages of our business model. Vertical integration of the development process, asset class diversification, mixed-use environments, and best-in-class properties are all important factors in our platform as well as our value proposition. This approach to real estate 44 years in the making, has produced substantial growth over the last 10 years. Since our IPO in 2013, we have increased our asset base over five times, expanded our market cap nearly four times, doubled our earnings per share, and perhaps most importantly to investors, outperformed the REIT index on a total shareholder return basis over the same period. All this despite the challenges of the pandemic and the current disfavor of the commercial real estate sector, which has impacted property values, consequently reducing our multiple and undervaluing our equity. While this may be viewed as respectable performance by many, it's by no means satisfactory to us. Our goal remains to demonstrate the true worth of superior assets, both property and human, and return the equity value to its previous highs and beyond. regardless of the macro environment. Over the next one to two years, in addition to continuing measurable growth in earnings and dividends, we intend to make strategic moves that should drive significant outperformance over our peers, as well as reinforce the flexibility, resiliency, and foundational strength of our diversified platform. Armada Hoffware has a well-established history of telling the market what we intend to accomplish, executing, and reporting back the positive results. We expect similar performance going forward. We took an important step in this process last month when our board authorized the limited stock buyback program. This initiative is predominantly meant to give us a head start on retiring our preferred equity shares, which are callable next spring. It is our intent to eventually fully extinguish the entire series. Around this time next year, We will complete all current construction projects at Harbor Point on the Baltimore waterfront. T. Rowe Price will begin their move-in process, and the adjacent allied apartments will start the lease-up phase. Shortly thereafter, we intend to begin marketing some combination of our joint ventures and or selected wholly owned assets within the development. Make no mistake. we believe strongly in the viability and growth prospects for all the uses at Arbor Point. In fact, we intend to continue developing there alongside our longtime partner, BD Development Group. That said, with four premier quality office buildings featuring many Fortune 500 companies on long-term leases and 700 luxury apartments, selective disposition of some of the trophy assets in the development will significantly reduce our capital allocation, thereby enabling us to expand in higher-growth southeast markets, mitigate concentration risk, and further de-leverage the balance sheet. By utilizing all the tools in our toolbox, construction capacity, preferred equity, mezzanine lending, and seasoned development partners, we expect to achieve significant portfolio expansion with minimal strain on the balance sheet while continuing to release the value created by our development activities. Sean will update you later in the call on new multifamily opportunities that we are executing. On a related note, although we don't anticipate exiting any assets at Town Center or Virginia Beach, we have decided against expanding the multifamily accounts at the complex at this time. Instead, after we receive the adjacent Bed Bath & Beyond site back, We will proceed with retenanting and expanding the property with new retail tenants. This decision affords us a much greater return with significantly less capital commitment and further enhances the retail and entertainment options for our patrons. This also allows us to redirect additional funds for multifamily investment in higher growth areas. Sean will comment on these details as well. This ability to pivot our emphasis among asset classes and submarkets is an advantage that has enhanced our profitability for over four decades. With the continued strength of the portfolio, robust fee income, and a lease-up of new properties, our expectation is for continued growth in earnings and asset value next year. Additionally, we believe that the strategic moves that I've described today will meaningfully accelerate year-over-year increases in virtually all our financial results in 2025 and beyond. Now I'll turn the call over to Sean.