Stonegate Capital Partners Updates Coverage on Armada Hoffler Properties

DALLAS, TX / ACCESSWIRE / February 23, 2016 / Stonegate Capital Partners has updated research coverage on Armada Hoffler (NYSE: AHH).

Company Description

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.

Summary

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

– Management owns 40 properties (net of 5 non-core assets in TN, VA, and TX), representing approximately 3.8M rentable square feet.

– AHH has dependable cash flow created by occupancy in excess of 95%.

– AHH acquired a portfolio of 11 retail centers located throughout the Mid-Atlantic and South-Central states for approximately $170.5M just subsequent to quarter-end; occupancy for the portfolio was most recently reported at 94%, with 1.1M square feet.

– The company has developed approximately $1.6 billion in assets to date and had four projects underway as of 12/31/15, one of which includes a partnership with Johns Hopkins in Baltimore, MD.

– With its internal team of developers, AHH can manage costs and timing on project, creating immediate equity when taking properties online at an estimated spread of 125 – 200 bps; 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 (operated through a taxable REIT subsidiary) gross profit was $4.6M in 2014 and almost $6M in 2015; AHH had approximately $83.4M in its construction backlog as of 12/31/15.

– The company constantly re-evaluates its properties and disposes of non-core assets when identified so that capital can be redeployed; the recent sales of Oceaneering International and Whetstone Apartments yielded 6.7% and 5.7%, respectively; just prior to that, sales of Sentara Williamsburg and Virginia Natural Gas yielded cap rates of 6.3% and 6.25%, respectively. The sale of the Richmond Tower closed in January 2016 at a 7.9% cash cap rate.

– AHH has a long-standing management team that owns approximately 21% of outstanding common shares and OP units as last reported.

– The company is well-positioned within the real estate industry with very favorable growth dynamics for its retail, office and multifamily designs and locations.

– The current dividend yield is 6.6%, with a dividend recently raised to $0.18 in Q116, and a normalized FFO per diluted share of $0.24.

We believe that AHH offers a well-diversified real estate investment opportunity for the marketplace, with a current share price trading well below our estimated NAV per share range of $13.50 – $15.00.

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

http://www.stonegateinc.com/reports/AHH_Q415_Update.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

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