AHRT

Good morning, thank you for joining AH Realty Trust first quarter of 2026 earnings conference call and webcast. On the call this morning, in addition to myself, is Shawn Tibbetts, Chairman, President, and CEO, Matthew Barnes-Smith, CFO, and Craig Romero, EVP of Asset Management. The press release announcing our first 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 June fourth, 2026. 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, May fifth, 2026, 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, transactions involving our multifamily portfolio, our real estate financing program, and our construction business, and the use of proceeds from such transactions, our rebranding and the effects thereof, the consequences of our strategic transformation, our liquidity position, 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 afternoon and the risk factors disclosed in documents we have filed with or furnished to the SEC. We will also discuss certain non-GAAP financial measures, including but not limited to FFO, normalized FFO, and FFO as adjusted. 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 ahrealtytrust.com. I will now turn the call over to Shawn.

Good morning, thank you for joining us today. Today, I will briefly reflect on the quarter results, our progress on the company's transformation to date, discuss portfolio highlights, and conclude with a review of our capital allocation activity. Since announcing our strategic restructuring on February 16th, we have executed more transformation milestones in a single quarter than in any comparable period in the company's history.

We entered into a binding agreement to sell 11 multifamily assets for $562 million, completed the sale of the construction business, advanced the wind down of our real estate financing platform through multiple dispositions, repurchased 4.3 million shares of common stock, nominated 2 highly qualified independent directors to the board, secured term sheets or reached final stages on all 3 2026 debt maturities, launched our new corporate identity as AH Realty Trust, and raised full-year FFO as adjusted guidance. The pace and magnitude of these actions reflect our unwavering commitment to unlocking shareholder value. I will walk through each of these in more detail. In the 1st quarter of 2026, we delivered solid operating results reflecting strong performance in our retail and mixed use office portfolios and the benefits of our disciplined operating approach.

AH Realty Trust is a pure play, high-quality retail and mixed use office REIT focused on identifying and realizing dominant market competitive advantages throughout the Sun Belt, Mid-Atlantic, and Southeast. Our company is primarily comprised of and focused on open air shopping centers and mixed use ecosystems within our markets. We are encouraged by a combination of the retail market strength and the leasing activity we are experiencing in both retail and office. We are also mindful of macroeconomic conditions and geopolitical uncertainty, including higher interest rates, elevated financing costs, and heightened global tensions as they continue to influence the broader real estate landscape. That said, our results exceed our internal expectations and reflect the actions we are taking to restructure AH Realty Trust into a simpler and more focused real estate platform positioned for long-term value creation.

As a result of the performance of the retail and mixed-use office portfolio, our visibility into the coming quarters and the transformational actions we've taken to date, we are raising our full year 2026 FFO as adjusted guidance range to $0.51-$0.55 per diluted share. We are here first and foremost for shareholders, and every single action we take is aimed at identifying and clearly demonstrating the underlying value in our portfolio. Another key initiative as part of this transformation is ensuring that we have the right board skills and governance profile to help guide us. I trust you saw our press release last week announcing planned changes to the board as part of our ongoing refreshment process to add directors with skills and experience that align with the company's evolved strategy.

This includes the board's nomination of Theodore Bigman and Lori Wittman to stand for election at the 2026 annual meeting of stockholders. Ted brings deep capital markets and real estate investment experience honed over decades at leading institutional platforms. Capabilities that are directly aligned with our capital allocation priorities and balance sheet optimization objectives. Lori brings extensive public REIT, operating, and financial leadership experience that will be invaluable as we execute the next phase of our strategy as a focused retail and mixed-use office REIT. Together, their skill sets are purpose-built for the company AH Realty Trust is becoming. I would also like to recognize George Allen and Dennis Gartman, who will not stand for re-election to the board at the annual meeting. We are very grateful for their years of service and significant contributions during their tenure.

The first quarter of 2026 was pivotal in AH Realty Trust's strategic transformation. We made meaningful progress implementing our new operating model and disciplined capital allocation framework. We are reshaping our business by exiting multifamily properties and focusing on high-quality retail and mixed-use office assets in markets where we have durable competitive advantages. As evidenced by our actions in the first quarter, we are taking decisive and deliberate steps to simplify the company, reduce leverage, and reallocate capital to advance a new operating strategy. During the quarter, we entered into an agreement with an affiliate of Harbor Group International to sell 11 of our 14 multifamily assets for $562 million. This transaction represents a major milestone in our strategy to exit the multifamily property sector and will meaningfully strengthen AH Realty Trust's balance sheet and materially reduce complexity across the organization.

Importantly, this sale reflects a significant premium to the value the public market was implicitly assigning to these assets within our REIT structure, which we believe further validates our thesis that substantial embedded value exists across our portfolio. We expect to close the sale in the coming weeks, subject to customary closing conditions. We are marketing the remaining two multifamily assets in Gainesville. Following these sales, we intend to retain only Smith's Landing in the residential category because its ground lease structure is unique relative to the remainder of the portfolio, and the property continues to generate stable cash flow. As a result, we concluded that given the stable cash flow generation, combined with the ownership structure, retaining Smith's Landing is appropriate at this time and remains consistent with our value preservation objectives.

Exiting the multifamily sector unlocks significant embedded value that has not been reflected in our share price, and there was a robust private market demand for our well-located and young assets. We also concluded that we prefer to compete in the commercial market, and that future growth for our company in multifamily would be difficult given the low cap rates. Given the highly volatile nature of Southeast U.S. multifamily, where supply cycles are long and absorption predictions are often inaccurate, we are far more excited to return that value to shareholders through de-leveraging our stable go-forward portfolio of well-leased, well-located retail and mixed-use office assets. Outside of multifamily, we made considerable progress exiting other non-core businesses. Last week, we completed the sale of the construction business, fully exiting. We also advanced the wind-down of our real estate financing platform.

We closed the previously announced sale of two multifamily financing investments. Additionally, I'm happy to announce that our partner closed on the sale of Allure last week. Collectively, we expect the asset sales already underway and those that have been completed will provide us with approximately $750 million in proceeds. Which we intend to use to de-lever the balance sheet and achieve our target leverage ratio of 5.5x to 6.5x net debt to total adjusted EBITDA, while also repurchasing shares in the market. We will do this while ensuring the dividend remains fully covered by core property operating cash flow. We will also have removed dependency on uneven construction fees and mezzanine investment revenue. I am proud of the significant progress we have made on our transformation in 2026.

We have already achieved a number of key milestones in our journey, and we are well-positioned to complete the transformation this year. A focused and agile AH Realty Trust will operate as a pure-play model, retail and mixed-use office real estate investment platform. Our retail portfolio consists primarily of open air shopping centers and mixed-use retail environments located in strong, fundamentally supported markets. Importantly, 95% of our office investments are concentrated in vibrant mixed-use settings rather than standalone suburban office assets. These properties benefit from integrated retail, residential, and experiential components, which continue to support consistently high demand from high credit tenants. At quarter end, our stabilized retail and mixed-use office portfolios were 94.8% and 96% leased, respectively.

In contrast, while our office product delivers superior occupancy and performance metrics that exceed those of our peers' office product nationally, we would like to see a better appreciation of its value. This disconnect reflects broader sector sentiment rather than asset-level fundamentals. 95% of our office portfolio is situated in mixed-use ecosystems, and therefore is highly differentiated and not suburban office product. As a result, our assets benefit from integrated retail, residential, and experiential components. These characteristics support durable demand, consistently strong occupancy, and a high-quality tenant base, resulting in operating performance that stands apart from prevailing conditions affecting the broader publicly traded office sector. The strength of our retail and mixed-use office portfolios was evident in their performance this quarter.

For the first quarter, FFO as adjusted was $0.15 per diluted share, exceeding our internal expectations and demonstrating the earnings power of our go-forward retail and mixed-use office platform. Craig will discuss portfolio performance in detail in his remarks. Turning to capital allocation, we remain disciplined and shareholder-focused. Since the beginning of the year, we have repurchased approximately 4.2 million shares for a total of $24.1 million at a weighted average price of approximately $5.70 per share, representing more than 4% of the common equity and reflecting our confidence in the underlying value of the business. Our commitment remains allocating available capital where we believe it is most beneficial to shareholders. Our NAV demonstrates the intrinsic value of our real estate and simultaneously informs our capital allocation decisions.

When combined with our transformation, we believe the implied yield relative to other capital allocation alternatives is compelling. To put it simply, we believe that investing in our own assets above a 9% cap rate is very attractive and creates more shareholder value than other available capital allocation options. We expect that our transformation will create additional financial flexibility to allow us to invest in future growth opportunities while building on the performance of the portfolio and the momentum of this transition. As you know, as part of the transition planning, we initially modeled up to $50 million of retail acquisitions to offset potential gains associated with the multifamily sale.

As we move closer to closing the residential transactions, we now have improved visibility into the timing and magnitude of the related tax considerations. We expect, in this case, that the transactions do not result in a material tax consequences to the REIT. With that clarity, given our current cost to capital and leverage objectives, we have reallocated approximately half of that previously modeled acquisition capital towards share repurchases to date. As stated, we believe this is the most compelling use of capital. We continue to evaluate our remaining allocation options while being mindful of leverage. Factors such as market conditions and potential dispositions will also figure prominently into our analysis. I want to acknowledge the key role our people play in our company's ongoing transformation.

Over the past several quarters, we have made meaningful changes across the organization to ensure that we have the right people, focus, and operating discipline to deliver on our full potential in this next chapter. We are investing intentionally in our people and building a culture centered on accountability, execution, and disciplined decision-making. We believe these efforts are critical to sustaining performance and successfully executing the next phase of our strategy. In closing, our transformation continues to gain momentum. The multifamily sale is a defining step forward, and we remain committed to executing our strategy with discipline, transparency, and strong governance. With a simpler platform, a strengthened balance sheet, and continued governance enhancements, we are confident that we are positioning AH Realty Trust with the resiliency and flexibility to capitalize on opportunities while generating consistent cash flows, disciplined growth, and superior risk-adjusted returns.

We appreciate the continued support of our shareholders and look forward to the opportunities ahead. With that, I'll turn it over to Craig Romero to go through our portfolio highlights.

Thank you, Shawn, and good morning, everyone. Before discussing first quarter portfolio performance, leasing activity, and expectations for the rest of this year, I'll draw your attention to additional information presented in this quarter's supplemental financial package, particularly economic occupancy. Economic occupancy, as opposed to leased occupancy, which we've historically presented, considers free rent periods, rent abatements, and periods prior to rent commencement, therefore providing stronger correlation to cash NOI. We believe reporting both economic and leased occupancy going forward will provide investors with greater clarity on both past and expected future results. Retail leased occupancy at the end of the first quarter was 94.8%, and economic occupancy was 92.5%. We expect rent commencements primarily at Columbus Village and the Interlock to drive retail economic occupancy increases during the second half of 2026.

Retail same-store NOI for the quarter was up 2.2%, driven by rent commencements on new leases across the portfolio, as well as positive cash spreads on both new leases and renewals. We anticipate growth to slow through the rest of the year because of certain vacancies and store closures, with annual same-store NOI growth ultimately settling well within our projected range of 1%-2%. Higher economic occupancy at the Interlock, Patterson Place, Overlook Village, and Columbus Village was the primary driver of first quarter growth. We expect these properties to continue to boost same-store NOI for the rest of the year, driven by rent commencements from new tenants, including Trader Joe's, Golf Galaxy, and F1 Arcade.

First quarter visits to the new Trader Joe's at Columbus Village continue to outpace the only other location in the market by nearly 2x, while the new Golf Galaxy ranks in the top 3 nationwide. During the first quarter, F1 Arcade opened at the Interlock, driving a 30% year-over-year increase in visits and a 45% increase in parking volume, solidifying the property's destination status in the market. Partially offsetting first quarter gains were vacancies at Southgate Square, Broadmoor Plaza, and Broad Creek Shopping Center, as well as store closures at Hilltop and Town Center. We expect these properties to weigh on current year same-store NOI as we work to backfill spaces previously occupied by Conn's, Party City, Jo-Ann, West Elm, and Orvis. However, we anticipated these closings and tenant demand for these spaces is strong, creating future growth opportunities.

We are already in the process of securing high quality national tenants to fill these storefronts at positive spreads and enhance the merchandising mix at these properties to create longer term durability. I look forward to providing further updates in the coming quarters. Our retail portfolio remains well positioned to capture sustained tenant demand for retail space at higher rents, as demonstrated by positive first quarter spreads of 14.4% on new leases and 4.5% on renewals. Office lease occupancy at the end of the first quarter was 96% and economic occupancy was 87.7%. We expect rent commencements at the Interlock and Town Center to drive economic occupancy gains during the rest of the year.

Office same-store NOI for the quarter was up 0.7%, driven by contractual rent increases on existing leases, new rent commencements, and 7% positive cash spreads on new leases. These economic occupancy gains were partially offset by vacancy at One City Center from space reclaimed from WeWork in the second quarter of last year. Nevertheless, we expect to end the year comfortably within our projected range of 1.4%-2.5% annual growth, supported by scheduled rent increases and anticipated rent commencements during the second half of 2026. At The Interlock, we've already begun realizing nearly $1 million of new ABR, with the majority expected to commence in the third and fourth quarters.

We anticipate that these economic occupancy gains, combined with additional increases at Thames Street Wharf, Two Columbus, and 222 Central Park, formerly Armada Hoffler Tower, will outpace temporary challenges at One City Center, 4525 Main, and Wills Wharf. While we are not forecasting any new rent commencements at either One City Center or Wills Wharf in 2026, we are seeing good activity and interest in the market and remain confident in our team's ability to re-lease the space. At 4525 Main, we remain on track to re-lease the 8,000 sq ft we recaptured last quarter, with lease execution expected by the middle of this year.

At One Columbus, while we expect lease occupancy to decline by roughly 10 basis points in the second quarter because of anticipated lease expirations, we expect economic occupancy to slightly increase, driven by rent commencements for new tenants at positive spreads. Additionally, we're already at lease on over half of the expiring space at One Columbus and are confident in our team's ability to backfill the rest, given the tremendous demand for Town Center office space. Just last week, we completed the consolidation, downsize, and relocation of AH Realty Trust's offices to accommodate this demand.

As a result of this intentional move, we unlocked and leased 38,000 square feet at 222 Central Park at top of market rents, creating $1.3 million of new ABR, which we expect to begin fully realizing in the third quarter of next year, with partial recognition weighted towards the third and fourth quarters of 2026. Town Center is a case study example of the type of asset in which we invest, high quality, differentiated, mixed use, and located in markets with high barriers to entry. Another good example is Southern Post, our newest mixed use asset delivered at the end of 2024, where this quarter we leased 22,000 square feet to Industrious. Just last week, our team executed another 9,000 square foot lease, bringing office lease occupancy at Southern Post to over 93%.

We expect economic occupancy to increase to over 60% by the end of this year and over 80% by the first quarter of 2028 as free rent periods for existing office tenants burn off. Office portfolio fundamentals remain strong with nearly eight years of WALT, high credit tenancy, and less than 2% rollover for the rest of 2026, as well as our team's demonstrated ability to lease space and grow rents. We see continued organic growth opportunity across both our retail and office portfolios through proactive leasing, mark-to-market adjustments on new leases, positive renewal spreads, disciplined expense management, and targeted redevelopment and capital investment where returns justify it. This operational focus is central to how we intend to drive consistent NOI growth and deliver long-term value going forward.

With that, I'll turn it over to Matt for more details on our first quarter financial results and an update to our fiscal year 2026 guidance.

Good morning, and thank you, Craig. AH Realty Trust delivered solid first quarter performance, laying a strong foundation for the 2026 fiscal year. The results reflect the resilience of our assets and the benefits of the actions we are taking to reshape our portfolio and implement a simpler operating approach with less debt, focused assets, and shareholder value that recognizes our asset quality. For the first quarter, FFO attributable to common shareholders was $20.6 million or $0.20 per diluted share above our expectations for the period. FFO as adjusted attributable to common shareholders was $15.1 million or $0.15 per diluted share, also above our expectations for the period. FFO as adjusted excludes the segments classified as discontinued operations, multifamily, construction, and real estate financing, therefore represents the clearest measure of the earnings of our go-forward retail and mixed use office platform.

We believe this is the metric investors should focus on as it reflects the simplified, higher quality earnings profile that will define AH Realty Trust following the completion of our transformation. Net operating income for Q1 was $34.7 million, representing a 1.8% increase year-over-year and approximately $700,000 ahead of guidance. AFFO totaled $19.9 million or $0.19 per diluted share, which exceeds our current cash dividend as outlined in the supplemental with a payout ratio of 72%. Starting with the supplemental package, this quarter reflects a comprehensive refresh aimed at enhancing transparency and aligning disclosures with how we evaluate the business internally.

We introduced several new metrics and disclosures, including economic occupancy, a refreshed NAV page, and rental revenue disaggregation, all of which are designed to provide clarity on cash flow durability, asset performance, and the embedded portfolio value. We believe these changes allow investors to more effectively track our continued progress by assessing both the quality and sustainability of our earning streams, specifically as it relates to future cash flow growth. A key highlight is the NAV section illustrated on page 30. This page is intended to provide a clear and transparent view of the underlying per share asset value, excluding the segments and assets categorized for discontinued operations. The analysis reflects the strength of our underlying real estate portfolio, including our high-quality office and mixed-use assets with the non-stabilized component currently representing Southern Post at development cost.

The NAV framework plays a central role in how we evaluate financial performance and deploy capital. As our transformation progresses, we believe the quality of our assets is increasingly positioned to translate into durable earnings and shareholder returns. Our NAV analysis points to the intrinsic value of the real estate and serves as an important reference point in our capital allocation decisions, including share repurchases. As Shawn touched on, we remain committed to executing a disciplined capital allocation approach centered on shareholder interests. To that end, we have continued to take advantage of the dislocation between our share price and underlying asset value through our share repurchase program. Year to date, we repurchased $24.1 million of common stock at a weighted average price of $5.70 per share, representing an implied yield that we view as highly attractive relative to other investment opportunities.

We see this as having a chance to invest our own assets at an effective implied cap rate for this quarter's share purchase above a 9% cap rate. Where else can we create more shareholder value than doubling down on our market-leading portfolio? As Shawn highlighted, dispositions of the multifamily portfolio, real estate financing platform, and construction entity are all either complete or well underway. Based on the headway made, we are well-positioned to continue advancing our balanced capital allocation strategy, paying down debt, making disciplined investments in select high growth markets, and continuing to execute our share repurchase program where appropriate. Turning to the balance sheet, we are proactively managing maturities and maintaining flexibility in what continues to be selective capital market environment. Looking ahead to the remainder of 2026, we have 2 office asset loans and 1 term loan scheduled for refinancing.

We are actively engaged with lenders on all notes and expect to complete these refinancings consistent with our broader balance sheet strategy. Starting with the term loan. Maturing at the end of May, we have received a term sheet from our current lenders and are working to extend this loan and maturity for 12 months under the same terms and conditions, including extending the pricing that we have today. Thames Street Wharf matures at the end of September. We are in the final stages with a relationship lender to close in the coming days on a five-year non-recourse asset-level note priced in the five and a quarter % to five and a half % range.

To round out the refinancings, we've also received a term sheet from a large institutional life insurance company for both five-year and seven-year fixed rate debt on the Constellation Building asset priced around 200 basis points plus the corresponding treasury, with the expectation to close on this refinancing in the next two months. We are pleased with the pricing and terms of each of these loans. This reflects the quality of the underlying assets and the credit strength of the tenants and reinforces our track record of prudent liability management and our ability to navigate an especially challenging office debt market. Reducing leverage to strengthen the balance sheet remains a core priority. Upon completion of the transformation, we anticipate approximately $700 million in total debt paid out, a material reduction that is expected to fundamentally reshape our capital structure.

Net debt to total adjusted EBITDA was 8.3 times at quarter end, temporarily elevated relative to the prior quarter. We intend to use proceeds from the sale of 11 of our 14 multifamily assets to meaningfully reduce leverage to our target range of 5.5 to 6.5 times net debt to total adjusted EBITDA, which we anticipate closing in the coming weeks. We ended the quarter with approximately $142 million of liquidity, providing adequate coverage of our capital needs. We are committed to maintaining a flexible balance sheet, disciplined capital allocation, and sufficient liquidity to navigate a potentially prolonged higher rate environment. Now moving to our updated guidance.

We are raising full year 2026 FFO as adjusted guidance to $0.51-$0.55 per diluted share, reflecting the continued restructuring progress, retail and mixed-use office portfolio strength, and the solid first quarter performance. We are confident that the actions underway, including simplifying our operating model, exiting non-core businesses, strengthening our balance sheet, executing opportunistic share repurchases, positions us to drive long-term value for shareholders. We are committed to unlocking that value one way or another. We have enhanced disclosures that will provide shareholders with additional transparency to continue to track our progress as we advance these initiatives. With that, I will turn the call back over to Shawn.

Over the past several quarters, we have taken many of the hard but necessary actions to reposition the company for long-term success. We have completed the majority of our strategic transformation, simplifying the business, strengthening our foundation, and sharpening our focus on a high-quality operating portfolio. Today, AH Realty Trust is a pure-play retail and mixed-use office REIT, owning and operating open-air shopping centers and thoughtfully integrated mixed-use assets in strong markets across the Sun Belt, Mid-Atlantic, and Southeast. With these actions largely behind us, we are now squarely focused on execution and on delivering sustainable performance that drives long-term shareholder value. The path forward is clear: Close the multifamily transaction, reduce leverage, continue to invest in our shares at a compelling discount to intrinsic value, and demonstrate through consistent operating results that this portfolio deserves to trade at a valuation commensurate with its quality.

We have never been more aligned with our shareholders. We remain deeply grateful for the continued support and confidence of our investors as we move into this next chapter. Operator, we are ready for the question-and-answer session.

Thank you. We are now opening the floor for question-and-answer session. If you'd like to ask a question, please press star followed by 1 on your telephone keypad. That's star followed by 1 on your telephone keypad. Your first question comes from the line of Yana Gan of Bank of America. Your line is now open.

Thank you. Good morning, and congratulations on the progress of the restructuring. The capital markets activity is especially impressive given the macro and interest rate volatility. I was hoping if you could talk to kind of the breadth and depth of buyers for multifamily and for the construction platform and maybe the decision to go with the portfolio versus single assets.

Yeah, good morning, Yana. Thank you for the question. We appreciate the congratulatory remarks. We're excited to be able to beat our forecast and raise. We're excited about the path forward. In terms of the capital markets, we've continued to see, especially in the multifamily and retail, obviously, the depth of the market. It's good to see that those markets remain strong even given the kind of macro headwinds. That being said, we had an opportunity to sell to Harbor Group here. Great deal for our shareholders, obviously, at a mid 5 cap on in place, and likely, hopefully good deal for their investors.

We saw interest, we talked to quite a few folks, we were able to make the best deal for shareholders, all things considered, with Harbor Group, we feel good about that. We're excited by the way, we're a couple of weeks out, that'll be a material move, as you're aware, for our firm at $562 million paying down debt, as you heard, buying back some of our own shares at what we believe is a nice discount. In terms of construction, that business was and has been in wind down mode. Our view was, let's sell it, the best buyer for that was actually the employees of the company.

We essentially traded that for a price that's north of what was due to the shareholders anyway in terms of gross profit. We sold that at a slight uptick from what gross profit would've otherwise been received by the shareholders. It's a tough business right now, as you could imagine, with interest rates, and we think this is the best move for the company, for the shareholders to create a more simplistic company, reduce not only confusion, but reduce risk, quite frankly, over the short, mid, and long run. We're excited about that.

Thank you. Super helpful. Appreciate the enhanced disclosure. You mentioned, you know, several lease commencements in second half 2026 for both retail and office, but also some offsets and known move-outs. Can you give any type of year-end 2026 economic occupancy projections or ranges for either portfolio?

Sure. I'll just start by saying that we are encouraged, by the tailwinds, by the strength of the market and the leasing kind of momentum and velocity activity out there broadly, especially, in terms of our retail and mixed-use office portfolio. I think, Craig, why don't you drill down a little bit, if you don't mind, just quickly, and talk a little bit about what's out on the horizon here.

Yeah, sure. Happy to, Shawn, and Yana, thank you for the question. When it comes to leased and economic occupancy, I think, you know, the widest gap is obviously today in the office portfolio, as you can see. The biggest pieces of that are the interlock, which we expect to see that gap narrow during the second half of the year as new tenants that we've secured and leased in prior quarters begin to pay rent. You know, one interesting anomaly is the Thames Street Wharf. You'll see a decent sized gap there between leased and economic occupancy. The main tenant there is Morgan Stanley. They have, you know, a month of free rent every other quarter. That happens to be this quarter.

You will see that gap narrow, actually close in the second quarter. Again, widen in the third, then close again in the fourth. A little bit of volatility there. Overall, macro speaking, you'll see the difference between leased and economic occupancy from our expectations to narrow as we progress through the second half of this year due to rent commencements.

Great. Thanks, Craig. Thanks, Shawn.

Again, if you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. Your next question comes from the line of Viktor Fediv of Scotiabank. Your line is now open.

Good morning, everyone, thank you for taking my question. I have a question on your decision to kind of shift from acquisitions to share buybacks. It kind of makes sense given where your stock is trading. Just trying to understand the financial implications, because if I'm not mistaken, you were planning to use some 1031 exchange, money to kind of do these acquisitions. Just trying to understand financial implications for you, connected with this decision.

Sure. Thank you, Viktor. Good morning. I think, you know, it's pretty straightforward. As we get closer to closure in a couple of weeks on the kind of biggest material part of our transaction or transformation, we have a better line of sight on the tax consequence to the REIT, and it looks like that will not be material. We chose to, given the value the stock was trading at and kind of capital allocation, opportunity cost, if you will, versus buying a retail center at a 7 cap, we said, "Look, north of a 9 cap, it's better to invest in our assets that we have perfect information on," and obviously to the benefit of the shareholder, kind of reduce that share count. We think that was the best move.

Obviously we'd like to get into a mode where we're acquiring additional properties, but not at all costs, right? It needs to be accretive to the shareholder. You know, our view was let's take the opportunity while there is a discount, and let's take also the opportunity to close that distance between current share price and what we believe NAV is. We will move through that chapter, as well as kind of look at some repositioning, kind of some redevelopment opportunities on the smaller scale within the portfolio as we close that gap. Continue to focus on our FFO growth to grow the value of the firm.

We thought it made a lot of sense, especially given that gap, to buy the shares back, kind of opportunistically, especially given that the REIT is not facing a material tax consequence as a result of the sales of the assets or otherwise the real estate positions.

Makes sense. Then on these two multifamily assets which are left in Gainesville, I see that now you're kind of expecting to close it in Q4 2026, first quarter of 2027. Just trying to understand your logic here. Are you trying to kind of reach full stabilization for those assets and then sell them at the highest price? Like, just trying to understand whether you will be willing to sell it earlier or later. How do you think about that?

The reality is they are stabilized now, and there's some market timing to this as well, in addition to the fact that the buyer was not willing to pay us what we wanted for those assets, and we believe the market will bear a better price. We're gonna take those and sell them at the market to get the best number that we can, and obviously, benefit the company, and therefore the shareholder, the best that we can in the form of paying down debt and bringing capital back on the balance sheet.

Got it. Just last for me on In terms of you mentioned kind of some opportunities to invest capital in redevelopments, or do you have, like, any out parcel, that you can invest in or, kind of upcoming redevelopment that are not on the list that you're kind of considering? Can you provide some additional details on that?

Sure. There is a page in the supplemental. Forgive the page flipping because I didn't memorize your page. Yes, page 29 of the supplemental, Viktor, includes opportunities that we see kind of on the horizon given the portfolio that we currently own. There are a number of out parcels there as well as some assets that I would characterize as maybe underutilizing the real estate. Out parcels are probably the quickest move, right, in terms of getting some accretive opportunity into the earning stream. Also there are some opportunities there with assets that may not be using the real estate in terms of the size of the plot they sit on. The box, quite frankly, may not be the best, you know, may not have the best tenant.

Kind of repositioning in terms of something like we did with the Bed Bath & Beyond to Trader Joe's out parcels. We have 2 other opportunities with assets with large parking lots and sitting on a large amount of acreage that we could think about more in the midterm. Yeah, we're thinking about that a lot. Candidly, we're doing a lot of work on that. Yeah, we'll continue to look for those opportunities and strike at the right time when it makes sense to best deploy that capital.

Got it. Thank you.

Your next question comes from the line of Jon Petersen of Jefferies. Your line is now open.

Great. Thank you. On the share buybacks, I mean, you talked about the implied cap rate of your company being well north of 9%. I mean, how do we think about, you know, where your share price needs to go, where you hit some sort of break even, where share buybacks make less sense and maybe investing in, you know, future acquisitions or buying back more debt is, you know, it makes more sense?

I think, Jon, you know Thank you for the question, first of all. Second of all, I think, when we get within a line of sight of NAV, I think would be the way to think about that for us, right? Theoretically, if we're at NAV, we can begin to think about deploying capital. I think that implies that our, you know, we're trading at a cap rate that's compressed relative to where we are today. We don't think we're there. Candidly, we think we've got some work to do to close that gap. In the short run, as you know, we bought back these shares, and we may do some more.

Yeah, I think we've got a little ways to go before we can think about actually deploying capital into, you know, an acquisition or otherwise. Obviously yield dependent and market dependent.

Okay. If we look at your lease expiration schedule over the next two or three years, are there any material mark-to-market opportunities, maybe particularly in the retail portfolio, that we should be thinking about?

Craig, that's squarely down the middle of your plate. Why don't you take that one?

Yeah, happy to take that, Jon. Thank you for the question. As far as expirations for this year, you know, about half of those we've actually already renewed at positive spreads. Feel pretty good about near term expirations. Looking out further, a lot of this is big box anchor spaces, which, you know, we'll expect to be able to push rents, you know, nominally on those. That's, you know, that's kind of the balance of the retail side. In office, I think there's still tremendous opportunity to mark to market, particularly in Charlotte at our Providence Plaza asset, where I know we are, you know, significantly below market. That asset's a little bit older, but we have plans to reinvest in that particular location so that we can drive further rent growth.

Still, you know, lots of organic growth opportunity in both sides of the coin, retail and office, and, you know, bullish about our prospects going forward here.

Okay. If we kinda, you know, Shawn Tibbetts, just bringing together all your comments, and just all the moves that you guys have made with the board refresh and the, you know, selling multifamily, you know, what would you say is the most meaningful movement that the company has made this year?

Wow, that's a tough one. As you can tell, Jon, and I appreciate the question, we're excited about where we are and more importantly, where we're headed. It's hard to single one out, but I think from an economic standpoint, the sale and the momentum created here as of late on the sale of the multifamily and the real estate financing as well as the construction business. I mean, we came to the market 3 months ago and said, "We are going to do these things," and we have materially done those things. I think when you add to that, you know, this kind of evolution of our company, the ability to bring highly skilled directors on board is, in my mind, metaphorically accretive to the board, right?

It gives us an opportunity to have some additional guidance. We appreciate more than they know the kind of contributions from George and Dennis. As we evolve this company, we're bringing two folks with deep capital markets, REIT, public REIT experience onto this board. We think that is helpful to us to kind of challenge some assumptions, work through the challenges that face us ahead, and continue to grow this company. Grow, again, close that NAV gap and grow the FFO and in turn, grow the shareholder value over time. We're just excited about this, excited about the opportunity, thankful for the directors that were with us, and very thankful for the ones that will be joining us.

I think, look, I'd be remiss not to say I'm thankful for the team for digging in and plowing through this challenging yet rewarding kind of phase in our company here. We're fired up, we're excited, we are bullish, and we are executing and we're excited about the future.

All right. Thank you.

Yes, sir.

Thank you. This concludes our question and answer session. I would now like to turn the call back to Shawn Tibbetts for closing remarks.

Thank you very much. First and foremost, we appreciate your interest in our firm. For the shareholders, your investment in us. For the employees, your continued resolve to see our company continue to succeed. I just wanna thank you for joining us today. We look forward to more exciting quarters in the future, look forward to some press releases from us. We're excited about where we're headed, couldn't be more excited for the support that we're receiving along the way. Thank you for joining this morning, have a nice day.

Thank you for attending today's call. You may now disconnect. Goodbye.

Good morning, ladies and gentlemen, and welcome to the Armada Hoffler Properties, Inc. Fourth Quarter 2025 Earnings Call. At this time, all lines are in 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 0 for the operator. This call is being recorded on Tuesday, 02/17/2026. I would now like to turn the conference over to Chelsea D. Forrest, Vice President of Investor Relations. Please go ahead. Good morning, and thank you for joining Armada Hoffler Properties, Inc.'s Fourth Quarter 2025 Earnings and 2026 Guidance Conference Call and Webcast. On the call this morning, in addition to myself, is Shawn J. Tibbetts, Chairman, President, and CEO; Matthew T. Barnes-Smith, CFO; and Craig Romero, EVP of Asset Management. The press release announcing our fourth quarter earnings along with our

supplemental and guidance packages were distributed yesterday afternoon. A replay of this call will be available shortly after the conclusion of the call through 03/19/2026. 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, 02/17/2026, 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, the potential dispositions of our multifamily portfolio, our real estate financing programs, and our construction business, and the use of the proceeds from such dispositions, our rebranding and the efforts thereof, the consequences of our strategic transformation, the impact of acquisitions and dispositions, 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, 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 documents we have filed with or 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. Yesterday, we formally announced the rebranding of the company as A H Realty Trust, effective March 2, which marks the defining moment and more about the transformation of the company and our path forward.

This past year marked a pivotal period for the company, particularly with respect to capital allocation, balance sheet strategy, and how we operate the business. I will begin this morning by discussing the strategic decisions we announced yesterday and the rationale behind them. I will introduce Craig Romero, EVP of Asset Management, to talk through highlights from the portfolio and Matt will cover our fourth quarter results and provide details on 2026 guidance. I stepped into this role one year ago with a clear objective to evaluate every aspect of our business: our portfolio, capital structure, operating model, and long-term positioning. Over the past twelve months, we have done exactly that, reviewing every layer of the business, challenging long-held assumptions, and focusing on where we believe we can create the most durable value for shareholders. This comprehensive process, backed with full support from the Board, resulted in a clear path that we believe positions the company to maximize shareholder value over time.

At our core,

we are a public REIT focused on well-positioned retail and office assets in growing markets. Alongside the relaunch of Armada Hoffler Properties, Inc. as A H Realty Trust, we announced the planned exit and divestitures of our multifamily portfolio and fee income businesses, including construction, to improve the quality and predictability of our income stream and meaningfully reduce leverage. I am pleased that we have already made substantial progress on these initiatives. We are under a LOI for 11 of our 14 multifamily assets with a global real estate investment and management firm, following a disciplined and targeted marketing process that began months ago, drawing strong interest from multiple credible parties. These negotiations are materially far along and we believe we are approaching final terms at an attractive price point and value. Despite the high quality of our assets, public market valuations do not reflect the underlying private market value of the portfolio. Exiting the multifamily portfolio unlocks significant embedded value by harvesting the arbitrage between public and private market valuations and accelerates our deleveraging program. In addition, the exit of our construction business is effectively complete, and we are substantially finalized on terms with the buyer. Lastly, we have executed a LOI with an institutional buyer to acquire the interest in two of our four real estate financing investments, and we are in discussions with our partner to exit a third. The remaining investment is currently in the market with comparable cap rates in the low five cap range. We expect that transaction to be completed in the near term, derisking the business. Given this progress, we have removed the associated revenue streams from our 2026 outlook. With this transition, we believe we will improve the company's long-term growth trajectory and position this

with inconsistent income

and no longer deploying capital towards sectors where our scale and advantage were limited. We believe in a streamlined operating model, with significantly reduced leverage, we will be a stronger, leaner, and more agile firm.

Better positioned,

to produce predictable earnings and sustainable cash flow growth in 2027 and beyond. At the same time, we are intensely focused on the operation of the company's retail and office portfolio. We believe the best way to drive durable value is to be the best operator in our markets, maintaining rigorous and fee income businesses. Our operating team holds a strong conviction that exiting the multifamily sector, strengthening the balance sheet, and concentrating on sustainable cash flow and disciplined growth most benefits the long-term value of the company. While the quarter itself is not the focus of today's call, it reinforces the stability of our retail and office assets and provides a strong foundation as we enter 2026. As we discuss guidance for the new year, as previously mentioned, it is important to note that 2026 guidance reflects the discontinued operations of the multifamily portfolio and the fee income portions of the business. While 2026 represents a transition year for the company, I want to underscore that throughout this period, we continue to maintain full dividend coverage from the cash flows generated by our operating properties while also meaningfully reducing debt. To provide added transparency around this shift, we included an FFO bridge in our guidance materials posted to our investor website. The bridge walks from reported 2025 FFO to a pro forma 2025 FFO that removes discontinued operations, and then to post-transformation FFO, which reflects the company as it will operate going forward. By removing contributions from the construction management business, the real estate financing platform, and the multifamily assets, investors can clearly assess the value of the streamlined retail and office portfolio. Importantly, by the end of the transformation, leverage is expected to improve by approximately two full turns, further strengthening the balance sheet and enhancing long-term resilience. Matt will discuss the guidance in detail. As we look ahead, our focus is on discipline, high quality, consistent growth, and a simplified operating model. With lower leverage and a clearer operating model, we are in a stronger position to pursue accretive acquisitions that offer embedded upside in key growth markets that meet our fundamentals. This transformation only happens with a dedicated team. Over the past year, we have stripped the company down to its foundation and are building it back up with the right people, the right focus, and the right operating discipline. It begins with our people, and we are confident in the team we have assembled to execute this plan. This marks a new day for the firm, and I am excited about reducing risk and positioning the company for future growth. As we enter this next chapter, we do so with a clearer strategy, a more focused portfolio, a streamlined organization, and a stronger financial foundation. We are not simply repositioning the company; we are fundamentally changing the quality of the business. We believe this transformation will result in a significantly stronger foundation that positions us to deliver predictable earnings, sustainable cash flow growth, and long-term outperformance. With that, I will turn it over to Craig Romero, EVP of Asset Management. Craig has been with the company for more than a decade and has been deeply involved in every aspect of our real estate operations. In addition to his extensive real estate experience, he brings a Big Four public accounting background, which further strengthens his strategic and financial oversight. He leads our asset management team with exceptional focus and discipline, and his deep expertise continues to be instrumental in driving our success. Given his experience and intimate knowledge of the portfolio, I am pleased to have him join the call for the first time to walk through the portfolio highlights. Thank you, Shawn, and good morning, everyone. As Shawn outlined, with the portfolio now fully focused on retail and office, our attention is squarely on execution at the property level. I will briefly cover fourth quarter operating performance, and then spend time on what we see ahead for the portfolio. Retail same-store NOI for the quarter was up 5.6% on a GAAP basis and 3.4% on a cash basis, driven by new leasing and rent commencements across the portfolio as well as positive renewal spreads of 15% GAAP and 10% cash. Specifically, fourth quarter cash results reflect rent commencements for long-term backfill tenants of anchor spaces in Atlanta, Durham, and Virginia Beach. Retail same-store results year-over-year were up 1% GAAP and down 1% cash. Weighing on both fourth quarter and full year same-store results was anchor space vacancy resulting from the bankruptcies of Conn’s, Party City, and JOANN Fabrics, totaling 92,000 square feet across the portfolio. These vacancies are reflected in year-end occupancy just under 95% that was temporarily elevated in the third quarter by short We anticipate rent commencing on roughly a third of the backfill space in 2026, with the balance starting by mid-2027. Looking ahead, we expect retail same-store NOI growth in 2026 to be supported by rent commencement at The Interlock, including Atlanta’s first and only F1 Arcade that opened earlier this month, as well as our successful redevelopment of Columbus Village. In the fourth quarter, both Trader Joe’s and Golf opened in the former Bed Bath & Beyond box at Columbus Village. Since opening, the new Golf Galaxy location ranks in the top five nationwide in terms of foot traffic, and the new Trader Joe’s store has seen more than double the number of visits. Successfully, we released all of Columbus Village at 60% higher rents. At full occupancy, the redeveloped Columbus Village is expected to generate over $1,000,000 of new ABR, the majority of which we anticipate realizing in 2026.

At Town Center

The NOI impact is diminished, given the below-market rent structures of both leases. Market conditions continued to favor existing brick-and-mortar retail with tenant demand far exceeding new supply. Our portfolio of shopping centers and mixed-use retail assets remains well-positioned to capture this demand as demonstrated by our team’s ability to lease space at

spreads. We are

in our team’s ability to relet both West Elm spaces at two to three times rent commencements in Town Center, specifically to Columbus, as well as Wills Wharf and Harbor Point. Renewal spreads during the quarter were positive 9% GAAP to 2.5% cash. Over the course of 2025, occupancy at The Interlock increased nearly 600 basis points, ending the year at over 94% leased. Year over year, office same-store NOI increased 6%, increased 500 basis points during the fourth quarter, partially offsetting our recapture of 8,000 square feet of space in 4525 Main. Decrease in occupancy during the quarter to 96.4% but we are already at lease with a backfill tenant at a double-digit re-leasing spread with lease execution anticipated by the middle of this year. By the second quarter of this year, we expect to complete the downsize and relocate. Our intentional move to occupy the most cost-effective space in A H Tower unlocked 38,000 square feet of premier workspace, all of which has been re-leased at an average rate of $35 per square foot, the highest rents in the market, creating $1,300,000 of new ABR that we expect to fully realize in 2027 with partial recognition in 2026. Looking ahead, we expect same-store NOI

growth

at One City Center in Durham, and Wills Wharf in Harbor Point. As a reminder, we reclaimed 30,000 square feet of space from WeWork at One City Center in the second quarter of this past year. In the fourth quarter, we negotiated the recapture of 9,000 square feet from an existing tenant at Wills Wharf in exchange for a $3,100,000 upfront fee and, in the process, consolidated most of the vacancy in the building onto a single floor. This proactive and intentional move allowed us to accommodate an existing tenant’s desire to rightsize their footprint while also giving us the flexibility to pursue larger floor prospects in the market. While we are not forecasting any new rent commencements at either One City Center or Wills Wharf in 2026, we are seeing good activity and interest in the market and remain confident in our team’s ability to re-lease the space. At Southern Post, we expect full rent commencement by existing office tenants in 2026 and we are seeing strong interest and activity on the balance of the office space. Office portfolio fundamentals are strong with nearly eight years of WALT, high-credit tenancy, only 1.7% rollover in 2026, and our team’s demonstrated ability to lease space and grow rents. We see continued growth opportunity across both our retail and office portfolios through proactive leasing and tenant retention, disciplined expense management, mark-to-market adjustments on new leases, and targeted redevelopment and capital investment for the next year, and the strategic transformation of the business. I will close with an update on our balance sheet and debt strategy

as we position the company for the next phase. This quarter and full year represents an important inflection point for the company, both in terms of financial performance and in the ongoing evolution of our platform, portfolio composition, and capital structure. Starting with the fourth quarter, our results reflect continued operational excellence across the portfolio against a complex macroeconomic and capital markets backdrop. For the fourth quarter of 2025, normalized FFO attributable to common shareholders was $29,500,000 or $0.29 per diluted share, above our expectations and guidance.

FFO

attributable to common shareholders was $23,100,000 or $0.23 per diluted share. AFFO came in at $17,800,000 or $0.17 per diluted share. Same-store NOI for the portfolio increased 6.3% on a GAAP basis and 7.1% on a cash basis. Turning to the full year, 2025 was defined by foundational work repositioning the company with a strong focus on balance sheet discipline. For the full year 2025, normalized FFO attributable to common shareholders was $110,100,000 or $1.08 per diluted share, above guidance. FFO attributable to common shareholders was $79,400,000 or $0.78 per diluted share. AFFO came in at $75,600,000 or $0.74 per diluted share

shift to

simplification of the platform, higher quality and more predictable earnings streams, and enhanced balance sheet resilience through positive cash flow. Starting the year with rightsizing of the dividend represents not merely a financial transaction, but a structural evolution of the company. As we look forward, we are evolving into a more focused, more transparent, and more predictable operating platform. Shawn discussed the planned disposition of the multifamily portfolio, the real estate financing platform, and the construction

entity.

I will now walk through

management’s estimates related markets, and easier to value and more closely aligns with long-term institutional capital. Post transformation, we will be positioned as a simplified pure-play retail and office REIT characterized by focus on recurring contractual cash flows with no reliance on fee or non-recurring income. This year, we report our results in the most fundamental and transparent way, using NAREIT-defined FFO for our earnings metric, cash same-store growth metrics to be consistent with other REITs in our space, and leverage at a net debt to EBITDA level. We will be guiding towards NAREIT FFO less the discontinued

of the general

contracting and real estate services business in 2026, disposition of the multifamily portfolio with the exception of Smiths Landing in 2026, realization of The Allure at Edinburgh in mid-2026, exit of the real estate financing portfolio in 2026, blended retail and office same-store NOI cash growth of just over 1.7%, acquisitions of approximately $50,000,000 of retail properties with a cap rate range of 6.25% to 7% in 2026, secured debt paydowns of approximately $270,000,000 as a result of the multifamily disposition, net unsecured debt paydowns of approximately $400,000,000. Page four of the guidance presentation illustrates an FFO bridge starting at our reported 2025 NAREIT FFO of $0.78 per diluted share and walking through the transition, ending with management’s estimated NAREIT FFO for the full year post transition of $0.64 per diluted share. As you can see, post transition, we expect to significantly reduce our leverage into a net debt to EBITDA range

That gives some context to the expected FFO growth post transformation. There is no question that deleveraging brings some dilution that dramatically decreases risk and backstops the dividend. Most importantly, page six illustrates our AFFO payout ratio both in 2026 and post transition. Management committed to the market that the cash from the properties would cover the cash dividend going forward and we do not intend to waver from that sentiment. You will see in the post transformation column of the table that there are no non-cash entries in the change in fair market value of derivatives. I will discuss our x-rate long-term debt as our hedges mature at the 2026. Finally, the guidance presentation focuses on growth. The reduction of debt enables the company to have a balance sheet that will unlock our ability to grow. Page seven shows post transformation, our earnings profile will consist of roughly 50% retail and 50% office NOI with 94% of that NOI in mixed-use communities. Page eight demonstrates the potential opportunity and estimated NOI trends, organic growth, planned 2026 acquisition basis, demonstrating strong retail and office NOI performance, prioritizing earnings quality, durability of cash flows, and balance sheet strength over short-term growth metrics. Turning to the balance sheet, our capital strategy is anchored in three principles: resilience, discipline, and proactive risk management. We are actively managing our upcoming maturities with three scheduled maturities in the near term: a $95,000,000 unsecured term loan maturing in May 2026, Cane Street Wharf maturing in September 2026, and the Constellation Energy Building maturing in November 2026. Our approach to addressing these maturities is structured and multifaceted, centered around placing long-term fixed-rate debt either at the property or the corporate level. We are currently already in the market with each of these loans, receiving preliminary pricing and terms similar to our inaugural debt private placement, which closed last July. This long-term fixed-rates approach is designed to reduce volatility in our cash flow and earnings, enhance financial resilience, and ensure the company operates from a position of balance sheet strength. As the transformative initiatives are finalized and we use the capital to pay down debt, the company will be in a much better position to ladder in long-term debt private placements and other long-term fixed-rate debt, extinguishing our reliance on derivative products as they mature. I will now turn the call back to Shawn. Thank you, Craig and Matt. I will close by paraphrasing something Nick Saban often says.

The key to sustained success is getting the right people on the bus, aligned around the same principles and standards, and focused on executing at a high level. Over the past year, that is exactly what we have done. We are no longer the company we once were. We have streamlined, refocused, and rebuilt the organization in a way that reflects who we are today: aligned, disciplined, and operating with clarity of purpose. The days of being a sprawling, complex octopus are behind us. We are a new company with a sharper strategy, a stronger team, and a more accountable operating model. When focus, accountability, and alignment come together, results follow. With that, Operator, we are ready to open the line for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer. You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Thank you. And your first question comes from the line of Viktor Fediv from Scotiabank.

Good morning, everyone, and thank you for taking my question. Matt and probably Shawn as well. So in terms of your long-term growth trajectory, on page eight of your guidance presentation, you highlighted the potential for, like, $10,000,000 of annualized commercial NOI addition starting from 2027 and beyond, which implies around $150,000,000 of acquisitions if you just

ask him six and a half cap rate. So how do you plan to finance this, and what are your key assumptions, particularly around share price and debt cost? For these to be achievable?

Viktor, good morning. Thank you for the question. I think this starts with the theme here, right? We want to maintain the appropriate leverage point. Right? So we, I think, have done what we said we would do here and demonstrated we are willing to do what is needed to unlock the value of the existing portfolio. That said, we want to be balanced in our approach. We want to be disciplined in our approach, and we want to be consistent in our growth. So there is a balance here. To your point, we think there is obviously debt capital available, but at the right time, we would like to balance the capital stack by continuing to add equity. But we are not going to do that at any cost. Right? And so at the end of the day, the shares need to be trading at the right level relative to NAV for us to even think about that. So what you are seeing us project here is we think we can get to that point, and we think it makes sense in the out 2027 years, if

Got it. And then if you look, let us say, five years from now, where do you see A H’s real detract in terms of retail to office NOI split

Yeah. I think as we have talked about here, and thank you for the question, we like to operate and we intend to operate going forward where we can add the most value. I think it is pretty clear that we add the most value in both retail and office. In the short run, we are focused on retail and specifically the type of retail that we have in our portfolio, right? And we are somewhat agnostic, agnostic in that regard because again, we add the most value there. I think if you talk to Craig, and I am going to ask him to chime in here, you know, we have our eye on a couple of opportunities now. It does not mean we are going to pull the trigger. But as you are aware, we have embedded in the model about $50,000,000 of capital to outlay to go into acquisition mode if, in fact, that makes the most sense for us. But we are not beholden to that. Craig, do you want to add a little more color there? No. I think that is good context, Shawn. I will only add that, look, our team has shown the ability to continue to lease space and grow rents. And so we will look for acquisition opportunities that display those same fundamentals in the right target market: population growth, income growth, below-market rents, and the ability to drive and create value. So our eyes are open. We are always active in the market. And we look forward to executing on our strategy.

Got it. And then just a quick follow-up on that. So, obviously, you are looking within geographies where you have some expertise and competitive advantage. Just trying to understand how wide your opportunity set is now in terms of you have kind of plans to acquire $50,000,000 this year but how wide is kind of under consideration pool now for you, and what are the key metrics you are kind of paying the most attention to?

Sure. I think, Viktor, the answer is best rooted in that we like and meet our markets that have fundamentals our investment thresholds. A little more deeply there, markets with growth, markets with population growth. You know as well as I that we operate in secondary markets. That way, we can build a moat and be the best operator. We are not intending on going into Tier 1 cities and, you know, battling it out with folks that are 50 times our size. Our cost of capital and our expertise primarily exists in the secondary market. So we like markets that are a reflection of the markets that we are in today.

Markets and

what their growth looks like on a go-forward basis.

Got it. Thank you.

Thank you. And your next question comes from the line of Andrew Berger from Bank of America.

Great. Good morning, and congratulations on putting these plans into motion. Could you just talk maybe high level about your latest thoughts on mixed-use communities and whether these retail investments that you are targeting are still within mixed-use communities or are these separate? And I guess also to that point on the office side, you know, it sounds like you are not looking to invest in office at the moment. You know, maybe just any more

color there as you think over the next couple of years about that split that you were talking about before with the retail versus office, you know, if office is something you would be willing to sell if you get, you know, the pricing on those assets a bit more in favor.

Morning, Andrew. Yeah. We are, obviously, capable in the mixed-use space, right? We have quite a significant chunk of our portfolio that sits in mixed-use. So we like mixed-use. But that said, as I mentioned earlier to Viktor, we like all of retail. And we are willing to look at all of that retail. In terms of office, I will answer the latter part of your question first. We are capital allocators in the end.

And

that is what we focus on. So if there is an opportunity to harvest capital at an appropriate price, we will do so. We do not have intentions of doing so as we sit here today. But we think that the office market does recover, specifically the high-quality trophy-type assets that we hold. And so we will take a look

color on the multifamily dispositions. Just maybe anything around the pricing for that and any more color on the timing?

Sure. As you are aware, we are under LOI with 11 out of the 14 assets. To be clear, the remaining two, notwithstanding the Smiths Landing asset, we will take to market in near future. So I think the best way to describe this is, number one, we are looking at fair and competitive pricing relative to market comps on the assets that we own. We are thinking in the mid-5% cap range, just to give you a number. In terms of progress, we feel really good about this. The buyer as well as ourselves have been leaning in heavily here, and we have been working feverishly to get there. We made tremendous progress. Obviously, the goal is to derisk the company, remove the uncertainty, set ourselves up for healthy growth. So we want to make sure we keep kind of as our north star here, the deleveraging aspect: selling these assets, harvesting the arbitrage, and applying that to the leverage, driving down that leverage on our balance sheet. But, yeah, we feel good. I mean, we hope to come back to the market very soon and talk more definitively about the deal that we are able to get. So we are excited about that. Actually, I just want to say while I have an opportunity here, I am proud of this team and the amount of progress we have made, and we feel good about it, and that is why we chose to share this with the market today.

Great. Thank you. And maybe just one final one for me on the dividend. You did address the 95% payout ratio earlier. I guess the question is where would you like to see that trend over time? You know, it is 95% in 2026 as well as post transformation. Should we be thinking about it, you know, just over the next couple of years as trending lower from there? Like, can you just talk a little bit? Like, is there any other metric we should be looking at besides AFFO payout ratio just to kind of get a sense of, you know, how you and the Board are thinking about the dividend?

Sure. I think it is important to note that we were cash flow positive in 2025, which is great. Happy to get us there. Obviously, it was a challenging environment to get there, but I think that is the first sign of health. We expect to be cash flow positive in 2026, which is good. I think you should be thinking about this with us being conservative with our capital, right? And we want to pay out a nice dividend, but we do not want to overpay a dividend. So at the end of the day, you are not going to see us aggressively hike that. You are going to see us stay in compliance with the REIT standards, right? But also put the capital back to shareholders in an appropriate manner. I guess that is a long way of saying we are not in a hurry to hike the dividend. We are in a hurry to simplify this company and delever this company. And the dividend will fall into place as the company grows and as the cash flows grow.

Thank you. And your last question comes from the line of Jonathan Petersen from Jefferies. Please go ahead.

I was hoping you could talk about development as part of your long-term strategy for growth. It seems like in the near term, the focus is maybe more on acquisition of retail properties, but do you anticipate being a developer in the future?

Good morning, Jonathan. Thank you for the question. Great question. Obviously, development has helped build a good piece of the portfolio that we own today. That being said, as you are aware, cost of capital are up relative to where they were in our past. And although we are willing to do development where it makes sense, we believe there is a risk-adjusted spread that is required there. So we think the most accretive, given the timing, would be acquisition in the short run. That said, we are willing to do development surgically and in the right space, and I will just offer as a proxy the Bed Bath & Beyond conversion to Trader Joe’s, right? That was a quick conversion of an existing box. And as Craig mentioned, we experienced almost 60% increase over the former rents in a relatively short duration. So we are looking for surgical development opportunities, really thinking redevelopment. We do have conversations frequently about development with partners, but I think you are going to see us partner with others to do development as opposed to large-scale development pipelines as you have seen us deploy in the past.

Okay. That makes sense. I was hoping to maybe also get more context on the growth from your core businesses, retail and office, that is expected in 2026. I think the guidance is for 1.7% same-store NOI, but your fourth quarter growth number was quite a bit higher than that. So are there any sort of headwinds or move-outs in the office portfolio? And maybe are you able to parse out expected growth in office versus retail in 2026 on a same-store basis?

Sure. I will start by saying the team has done a tremendous job working ahead of the curve on move-outs and vacancies. And I think Craig can give you some more color here. But at the end of the day, we see upside. I think Craig mentioned the West Elm in the comments previously. We see opportunity there given the very low rent relative to the market there. So Craig and his team have been working on this. As you know, we take very seriously the rollover and vacancies, and we like to stay ahead of those. I think, if you do not mind, would you add a little more color on what you are seeing out in 2026 and beyond? Yes. Happy to, Shawn. And Jonathan, thank you for the question. Yeah. In my prepared remarks, I mentioned the anchor space that we got back with the bankruptcies of Conn’s, Party City, JOANN. We made a ton of progress there in terms of backfilling and leasing.

Still have a little bit of work to go.

Of course, with tenant build-out and move-in, there is lag in between former tenant exiting and new tenant commencing rent. So 2026 we are in that in-between period for the most part, and that is what you will see weigh

a bit on 2026 growth. With anticipated growth coming

in 2027 in the beginning and throughout 2027. So that is really what is dragging on retail results for next year.

Shawn mentioned West Elm. That is basically we did take back this first quarter.

At below-market rents, so we are excited, actually really excited, about taking that space back.

And the ability to re-lease at two to three times rent, bringing those spaces to market.

On the office side, not a ton of rollover there, right? So near-term risk is low.

And well-diversified across the portfolio.

The two things really

causing headwinds for us: the space at One City Center in Durham, which we have all known about and have been proactively managing, trying to mitigate, seeing good interest in the market there, as well as a little bit of space we took back at Wills Wharf to accommodate our existing anchor and to offer greater flexibility to prospects in the market. So all told, I think 2026 will be a little bit of a gap year in terms of that, with expected greater growth in 2027.

Thank you. That ends the question-and-answer session. I will now hand the call back to Shawn J. Tibbetts for any closing remarks.

Sure. Thank you very much. Thank you all for joining us today and your interest in our company. I just want to share with you, we could not be more excited about this. Our team is focused. Our team is intentional. And we are looking forward to putting the company on a growth trajectory. And that is really our message here, right? We are working feverishly to put the balance sheet in the place that it should be and set ourselves up for growth for the coming year. So thank you all for your interest today. We appreciate your time and your investment in us.

And this concludes today’s call. Thank you for participating. You may all disconnect.

Good morning, ladies and gentlemen, and welcome to the Armada Hoffler AHH Third Quarter 2025 Earnings Conference Call. [Operator Instructions] This call is being recorded on November 4, 2025. 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 Third Quarter 2025 Earnings Conference Call and Webcast. On the call this morning, in addition to myself, is Shawn Tibbetts, President and CEO; and Matthew Barnes-Smith. CFO. The press release announcing our third 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 December 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 are made herein as of today, November 4, 2025, 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, out 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 this morning and the risk factors disclosed in documents we have filed with or 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 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 third quarter results. Before getting into the results, I want to thank our Board of Directors for appointing me Chairman of the Board effective the beginning of the year. I appreciate their confidence in me and our leadership team. We've made meaningful progress this year and have completed much of the hard work required to position the company for a strong performance over the next several years. We are [Technical Difficulty] excellence across the platform. Our teams are laser-focused on strengthening systems, streamlining processes in leveraging technology for data-driven insights to enhance decision-making and portfolio performance. My priority is to ensure the market properly recognizes the unique value of our portfolio as we enter 2026 as a more focused, simpler, stronger REIT, for the balance sheet positioned for growth. Our progress includes aligning the dividend with property level cash flows, refreshing the leadership team, replacing a director and sharpening our focus on core operations. We also aligned our 2025 guidance with the planned reduction in fee income to better highlight the strength and stability of our recurring property earnings. We are confident in the strategic actions completed this year and remain focused on repositioning our model offer for sustained growth and long-term shareholder value creation. Our near-term objective is to demonstrate and unlock the value embedded in our real estate through continued consistent execution and transparent communication with investors. The Armada Hoffler portfolio continues to deliver consistent NOI growth, underscoring the quality of our assets and the consistency of our execution. At the same time, we are making progress enhancing the balance sheet quality and proactively managing our capital base including leveraging capital recycling opportunities that strengthen long-term growth and financial flexibility. Our strategic foundation remains centered on quality, a core value that guides how we operate and allocate capital. We remain focused on maintaining a high-performing portfolio, optimizing property level performance and delivering reliable results quarter after quarter. The third quarter results were solid across our portfolio. As outlined in our earnings release, we delivered normalized FFO of $0.29 per diluted share, supported by consistent outperformance across our commercial asset classes with overall portfolio occupancy averaging 96%, including 96.5% in office, 96% in retail and 94.2% in multifamily. These results underscore steady demand and durable performance across all segments. Property level income continues to outperform our 2025 guidance, which contributed to beating consensus for the quarter. As we outlined in previous quarters, we adjusted our outlook for construction activity this year and remain on track with those revised projections. Higher NOI, offsetting the construction adjustments has allowed us to maintain a 2025 normalized FFO guidance target range, consistent with the original 2025 guidance target range, which we are narrowing to $1.03 to $1.07 per diluted share. This reflects our continued execution of the strategic shift away from reliance on fee income into an earnings stream predominantly reliant on higher-quality recurring property level earnings. Now let me take a few minutes and walk through our key sectors. From a broader market perspective, fundamentals remain supportive for retail. Vacancy remains close to record lows. New supply is constrained and retailers continue to show strong preference for high-traffic, open-air centers and grocery-anchored formats. According to Green Street retail pricing per square foot posted double-digit annual growth in the second quarter, reinforcing our bullish view of this asset class. Our retail portfolio continues to demonstrate strength and resilience, supported by a focused strategy of owning properties located within submarkets where we can leverage or create a competitive advantage. Across these locations, we actively extract value through leasing, tenant reconfiguration and redevelopment initiatives, positioning our centers to benefit from broader national trends in retail. For the third quarter, our retail portfolio continued to exhibit these strong fundamentals. Renewal spreads averaged 6.5% on a cash basis, reflecting continued demand. Foot traffic across our centers, particularly at mixed-use destinations like Harbor Point and Southern Post rose 13% compared to the prior quarter, demonstrating the success of our leasing and place-making initiatives rooted in driving consistent consumer engagement and ultimately supporting rent growth. As we mentioned last quarter, we have filled all of our big box vacancies resulting from recent bankruptcies, including Conn's, Party City and Joann's with higher credit tenants. This includes downsizing Burlington and Southgate and Colonial Heights to make room for a national sporting goods retailer as well as backfilling Party City with Boot Barn and Joann with Burlington at Overlook Village in Asheville, strengthening the merchandising mix alongside anchors such as T.J. Maxx, HomeGoods and Ross. These transactions reflect broader retail market dynamics. Nationally, big box development has been limited with few new entrants targeting infill market. This constraint has elevated demand for existing well-located retail space. High-credit tenants are seeking locations with strong demographic, nearby residential density and complementary tenants that drive traffic. Our centers are meeting the criteria, allowing us to capture top of market rents on repositioned or retenanted space. At Columbus Village in Virginia Beach, we are nearing completion on reformatting the former Bed Bath & Beyond box to enhance the center with Trader Joe's and Golf Galaxy, both expected to open before the end of the year. This reconfiguration will increase rents by over 50% while enhancing the overall tenant mix and further strengthening the appeal of Town Center of Virginia Beach District. Overall, our retail strategy leverages market trends, tenant credit strength and experiential demand to position our portfolio for sustained outperformance. This knowledge-driven approach enables Armada Hoffler to proactively identify opportunities to optimize tenant mix, capture rent growth and maintain our centers as destination locations that attract customers and drive long-term value. On the office side, while the broader sector to navigate structural headwinds, the recovery is clearly bifurcating in favor of high-quality amenitized assets in desirable, well-located markets. Our holdings sit on the right side of that divide. We continue to see occupancy stability, leasing wins and renewal spreads that capture value for premium space. As supply constraints and tenant preferences tilt toward quality rather than square footage growth, we believe our positioning provides a distinct advantage. Our office portfolio is 96.5% occupied and few near-term expirations. Demand continues to favor office properties a walkable, amenity-rich, mixed-use environment where tenants benefit from retail, residential and dining access. We continue to see interest from firms relocating from older suburban parts to dynamic centralized locations, supporting the long-term value of our office assets. The former WeWork floor in One City Center is the largest contiguous vacant space in our portfolio, and we are seeing active interest. We recently announced a 12,000 square foot lease with Atlantic Union Bank at One Columbus and Town Center, bringing overall occupancy in Town Center to 99%. This stands in sharp contrast to the narrative seems in most major U.S. city, as office assets continue to demonstrate strong demand and sustained high occupancy, driven by their location within the region's premier mixed-use environment. Asking rents across Town Center assets now average nearly 30% above the broader Virginia Beach market across office, retail and multifamily, underscoring the effectiveness of our mixed-use strategy and the enduring strength of this district is a true live, work, play destination. Our multifamily portfolio continues to demonstrate resilience, supported by healthy leasing fundamentals and proactive management. During the third quarter, portfolio occupancy held at 94.2% in line with the second quarter. Effective lease trade-outs averaged 2.3% for the quarter with renewals averaging 4.3% trade out and new leases flat. These figures do not include the 22 units at Greenside that were offline during the quarter, up modestly from an average 19.7 units in the first and second quarters. Last quarter's reported occupancy included those units, so the current figures reflect a more accurate representation of stabilized performance. Multifamily projects starts to remain a critical factor in supporting fundamentals with construction lending down significantly compared to the 2020 to 2022 cycles, the market is moving towards improved balance. Elevated residential borrowing rights are also keeping renters in existing units, limiting turnover and maintaining occupancy stability across our portfolio. Year-over-year from September 2024 to September 2025, national average rents increased only 0.6%. Our stabilized multifamily properties outperformed this trend by approximately 50%, achieving 0.9% year-over-year rent growth, demonstrating the strength of our assets and the effectiveness of our proactive management approach. At Allied Harbor Point, leasing continues to progress well, and we are on track to stabilize mid-2026, earlier than projected. Prospects and residents are drawn to the building's premier waterfront location, best-in-market views and modern finishes. As the newest residential property within the Harbor Point District, Allied offers an unmatched living experience, it complements the surrounding retail office and entertainment uses, reinforcing its appeal as one of Baltimore's most desirable addresses. At Greenside in Charlotte, remediation and enhancement work to address water intrusion in several units is progressing in phases as we have previously disclosed. The effective units I mentioned a few minutes ago, are obviously an upside opportunity once we conclude this project. These improvements will further strengthen the property's quality and long-term value, supported by its prime location near major medical and innovation districts in Charlotte. Looking ahead, we see multiple avenues to drive FFO growth across our portfolio, guided by a disciplined capital allocation framework. Strong leasing momentum and a high return redevelopment pipeline allow us to capture rent growth and enhance property value through proactive renewals, backfills and targeted reconfiguration. At the same time, we pursue disciplined acquisitions through intentional capital recycling activity, focusing on projects to combine stabilized income with redevelopment potential where possible. By targeting markets where we can create a competitive advantage, including submarkets that exhibit very positive fundamentals beyond the typical Sunbelt trade areas where pricing is being good up, we leverage our leasing and operating expertise to unlock value, ensuring that each investment is accretive in the near term and drives long-term portfolio growth. On the capital front, we remain focused on enhancing flexibility and mitigating balance sheet growth. Our July debt private placement, raising $115 million reflects continued confidence in the quality of our portfolio, our management team, our strategic approach and the overall strength of the company. The proceeds bolstered our liquidity position, extended our weighted average debt maturity and were used in part to fully repay the construction revolver at Southern Post, further positioning us to navigate evolving market conditions with confidence. We continue to focus on generating an increasingly conservative balance sheet, targeting reduced leverage, ensuring ample liquidity to fund ongoing redevelopment and growth initiatives. This disciplined capital structure provides flexibility to act on attractive opportunities while preserving balance sheet strength and stability. We plan to continue expanding relationships with institutional credit investors, supporting long-term growth and maintaining financial optionality. We remain focused on value creation through disciplined execution and intentional capital allocation. From retail leasing to office occupancy stability and multifamily lease-ups, we are building a stronger, simpler and more resilient Armada Hoffler, capable of generating consistent, predictable earnings growth. I am proud of the momentum we have generated and confident in the team's ability to deliver sustained, reliable earnings growth while enhancing shareholder value. With that, I'll now turn the call over to Matt to provide additional detail on our financial results.

Good morning, and thank you, gentlemen. Armada Hoffler delivered a strong financial quarter as expected, underscoring the consistency of our operating platform, the quality of our diversified portfolio and the continued execution of our capital strategy. With our balance sheet repositioning well underway and fundamentals stabilizing across our commercial assets classes, we entered the final quarter of the year from a position of strength and operating flexibility. For the third quarter of 2025 normalized FFO attributable to common shareholders was $29.6 million or $0.29 per diluted share, slightly above our expectations and full year guidance. FFO attributable to common shareholders was $20.2 million or $0.20 per diluted share. AFFO came in at $19 million or $0.19 per diluted share, demonstrated continued alignment between our operating cash flows and the restructured dividend. Same-store NOI for the portfolio increased 1% on a GAAP basis. Our performance this quarter demonstrates the benefits of a simpler, more durable capital structure and disciplined execution by management across our portfolio. As of September 30, 2025, net debt to total adjusted EBITDA stood at 7.9x, stabilized portfolio debt to stabilize portfolio adjusted EBITDA stood at 5.5x. Total liquidity for the quarter is $141 million, including availability under our revolving credit facilities. AFFO payout ratio stands at 74.9%. And after adjusting for noncash interest income, the ratio was 93.9%. Our portfolio weighted average interest rate remained consistent at 4.3%. Our diversified portfolio continues to demonstrate meaningful strength, particularly across our retail and office holdings. Leasing pipelines remain active and collections and occupancy levels have remained resilient in each of our segments, respectively. As expected, our retail segment showed quarterly declines in same-store NOI, reflecting the temporary downtime resulting from tenant bankruptcies such as Conn's, Party City, Joann's and Bed Bath & Beyond. Same-store NOI decreased 0.9% on a GAAP basis and 2.5% on a cash basis. These near-term results are consistent with our strategy to create long-term value through tenant credit enhancements and capital upgrades where returns can be achieved. With over 85% of this space already under lease or LOI, we anticipate realizing initial returns on our backfill efforts beginning in Q4 of 2025, continuing into 2026 with full economics and over 20% rent growth achieved by mid-2027. Releasing spreads on renewed leases remained healthy at 5.7% on a GAAP basis and 6.5% on a cash basis, demonstrating continued tenant demand for retail space in a supply-constrained market. From a broader market advantage, fundamentals remain supportive for retail. In the office segment, we continue to see exceptional occupancy levels at 96.5%, a modest improvement from last quarter, strong renewal spreads at 21.6% on a GAAP basis and 8.9% on a cash basis, albeit on a small amount of space that reflects the value for our premium assets in desirable locations. Our office segment posted positive same-store NOI results at 4.5% on both a GAAP and cash basis. By focusing our capital and operational efforts on retail assets with dominant demographics, proven tendency and strong in-place cash flows combined with office assets to reflect the flight towards quality and the margins for renewal upside, we are well positioned to capture our residual growth as the broader market conditions normalize. In short, the intersection of internal execution that is asset level leasing, cost control and capital reinvestment and the external tailwinds of limited new supply in retail, improving select office fundamentals, investor capital returning to quality real estate gives us confidence in the durability of our cash flows going forward. Corporately, we continue to manage expenses tightly. G&A remains on track to be materially reduced year-over-year, reinforcing our focus on efficiency while maintaining the resources required to execute on managing our assets and redevelopment opportunities. As you all know, we have and are taking the appropriate steps to rightsize the construction entity, aligning its workforce with current backlog levels, making fiscally responsible decisions for shareholder value. Capital markets remain selective, and we are structuring our balance sheet to reflect that reality. With our debt private placement completed in July and our liquidity stabilized through prudent cash management, we have the ability to remain patient and disciplined as the cycle evolves. We are engaged with our lending partners and are looking ahead to the back half of 2026 and our respective pending maturities. Early indications are leading us to expect that once our 2026 outstanding debt has been refinanced, we will be able to achieve a portfolio weighted average interest rate slightly below 500 basis points. Reflecting the stability in our operating results and visibility into year-end performance, we are narrowing our full year normalized FFO guidance range to $1.03 to $1.07 per diluted share, reaffirming our confidence in the trajectory of the business. With that, I'll now turn the call back over to Shawn for his closing remarks.

Thank you, Matt. I want to thank our team for their continued dedication to our shareholders and for their trust and support. Operator, we are ready for the question-and-answer session.

[Operator Instructions] Your first question comes from Viktor Fediv with Scotiabank.

So I'd like to ask about the acquisition of at least 1 real estate financing asset Solis Gainesville. Since the asset is across the street from the Everly, we can already see some negative effects on both occupancy, which is more than 200 basis points down year-over-year and monthly rent, which also declined more than 11% year-over-year. So can you provide some insights into the expected going-in cap rate on this asset and potential synergies for managing 2 assets altogether and as well as your expectation for same-store NOI growth for both assets over the next 2, 3 years?

Sure. Thank you for the question, Viktor. I think this -- the answer to the question starts about a year ago, we had signaled to the market that we would bring on to the balance sheet, not only Gainesville II but the Allure. So let's touch on Gainesville II first. Our strategy, our thesis there has always been, we want to run this asset combined with the Gainesville I asset, which is called The Everly or rebranded at The Everly. We think there are synergies there. We think it comes in to answer your question at or above our cost of capital, given that we are going to leverage synergies there, think head count reduction and a normal building as a result of running these together. I mean just rough, we think there's about 50 basis points of value there to be gained by us. In addition to that, as we see the new supply burned off, by the way, the new supply is ours. We'll see concessions burn off and therefore, we'll see some uplift, and we expect the positive same store to get there fairly soon after stabilization. So I think it's a good story. It's what we had intended to do for the past 12 months or so, and we're looking forward to it. Slightly different story for the Allure. We have seen some very strong bids in the market -- in that submarket as of late. And so we're in discussions with our partner about what's the best move given the kind of high bids for that type of asset, there could be a case where we either bring it on balance sheet, which we can do and would love to do or is the better opportunity cost equation to sell that in the open market and look for other deals with our partner there. So a little more to come there. That transaction essentially is going to be deferred until next year. So that's why you saw us pull that back from coming on the balance sheet here in the third or fourth quarter of this year.

As a quick follow-up, so if let's say, this Allure asset is sold to third-party and loan is repaid before maturity? Will you receive any additional fees on top of that principle and what has already accrued?

I think it's inappropriate for me to speak on that right now, Viktor. I think let's see what happens. We'll certainly recoup our capital and have a conversation with our partner about how to make the best deal there. But I think given where we are and what we're seeing in the market, we've still again, got an opportunity cost question here. The good news is we are very much in the black on that asset, which is great for both us and our partners. So more to come there.

The next question comes from Rob Stevenson with Janney.

Shawn, just while you're talking about the real estate financing portfolio, how should we be thinking about the Kennesaw, Georgia loan in the asset as it gets closer to stabilization? Is that one also more likely to be sold in the loan repaid? Or is that one more likely to be brought in-house?

Yes, Rob, I think that's an asset that probably doesn't fit our core strategy. So in addition to that, I think you'll see that -- you won't see us pursuing that one, per se. I think that will be sold as the answer to the question. So yes, that's not one we intend to bring into the pulp.

Okay. And then beyond the $18 million or so in-progress redevelopments, any of the 10 or so other opportunities in the supplemental expected to start in the next couple of quarters? And how extensive are the costs associated with those opportunities?

It's interesting. We've seen some attractive kind of projects there. We -- I think let me start by saying this, we are continuing to see development deal flow. It just doesn't fit the risk-adjusted spread. So our thesis is, again, back to the opportunity cost, kind of long-term value creation. We think that the capital is best spent on some of these captive projects. That being said, I don't see anything starting like fourth quarter, probably not first quarter, but our team is doing quite a bit of diligence on a few of these. I mean think outparcel, think older kind of '90s, 2000s vintage assets with large parking lots. We're taking a look at how do we use the real estate kind of under our control and create opportunities there for lift in the short run. So a long way of saying, we're looking at it. Our development team is looking at it hard. We meet about it actually weekly. But I don't think we know enough now to say we're ready to fire off the next one. That said, as you can see with the Trader Joe's, we're very excited about those types of opportunities and the list that they create.

And then last one for me. How are you and the Board thinking about recycling assets and using the proceeds to reduce leverage and repurchase common stock. And when might be the right time to explore something with one or more of the Baltimore assets, et cetera?

Yes. I think the answer is we are constantly or consistently thinking about that. Our job as capital allocators, as you know, is to think about the opportunity cost of that capital. So we -- as you may know, thought about an asset sale in Charlotte. We've got some strong bids, Providence Plaza, the challenge became what is the best opportunity cost like kind of equation for that capital. We saw rent growth climbing down in Charlotte, so we said let's hold on to that asset. But we are thinking about those things. You see us renewing for long-term anchor leases, so on and so forth, to lock in the value in some of these assets. And at the right time, we'll strike on deals that make sense. I don't want to say we're going to get into buyback land, but certainly, there's an attractive accretive opportunity there. I'm not sure that we'll take that versus long-term property -- kind of income-producing property. But yes, that's what we are doing right now, especially given the price of the equity and how that's trading in today's market. So a long way of saying opportunity cost is our main focus, and we are looking at all of the assets that we have to determine where we can create some arbitrage in terms of what the markets valuing our real estate at and what the broader market would potentially buy at.

The next question comes from [ Jamie Wise with CVU Capital ].

First question is, could management discuss the annual cost of its interest rate swaps? And what are your plans going forward with the interest rate swap activity? Also, if you were to change your approach to buying the interest rate swaps and reducing your interest as a result of the swaps, how would that impact AFFO?

Jamie, thank you for the question. So interest rate swaps obviously changed the pricing with the market at that time. We look at that essentially as a prepaid interest when you're looking at paying that to essentially come into the total cost of the debt over the long run. We renewed back this quarter some maturing swaps that we had, we renewed them slightly early as we came within our strike rate, the price that we felt would fit in with the interest expense that we wanted, total cost for full guidance. As I've talked about many times before, we are looking over the long term a transition in this balance sheet to long-term fixed rate debt. So we would work through that cycle to reduce the reliance on derivatives as we get those long-term fixed rate debt in place. And that's what we're going to be looking for, as I mentioned in my remarks, for those financings that are maturing in 2020 -- 2026.

And one other question. Earlier in the year, you had mentioned that the dividend was stress tested for recessionary scenarios and also that you are expecting net debt to EBITDA to sort of end the year around the 7.4x area. I was curious if you could talk about that. Is this a dividend stress tested for 2026 and different sorts of interest rate scenarios as you look to do less hedging activity? And are those -- does management still hold by what it said earlier in the year?

Yes, certainly. So as you can recall, we rightsized the dividend to make sure that our cash flows from the properties covered the distribution, the cash distributed out the door in the dividend. So we did that back earlier in the year and made sure that there was enough buffer there to stress test that dividend through the whole of the year, not just from a cash flow perspective, but also from the REIT compliance tax perspective as well. As you can see, there is a number of charts in our supplemental that show the dividend distribution compared to AFFO and AFFO less noncash interest expense. So as close to a cash number as we can provide and be transparent there.

Jamie, this is Shawn. I think the answer to your question is yes. What we said in the earlier part of the year holds true. We stress tested that against many different scenarios as it relates to dividend. As it relates to the derivative positions, we are on a journey here. We've committed to the market that we want to continue to get into more pure fixed rate debt, hence, that kind of our placement of $115 million back in the middle of the year, back in the July time frame. And you're going to see us continue to navigate that journey. It won't happen overnight. But yes, I think the answer to the question is we want to move to a more pure fixed balance sheet over time, and we intend to hold that dividend and have the ability to do so plus or minus fluctuations in the market. I appreciate the question.

And then, Jamie, to touch on the last bit of the question as it relates to leverage, we still have the full debt from the development pipeline on our books. And as we lease up the Allied and Southern Post leverage will come down over the next or the coming quarters.

The next question comes from Jon Petersen with Jefferies.

Maybe I'll just stick on the dividend. I'm just curious how you think about growing the dividend, right? If we're modeling over the next few years, should dividend growth tie out with AFFO per share growth at these levels? Or -- are you going to kind of pause on raises for a while to give yourself more of a buffer? How do we think about that?

Jon, thank you for the question. I think -- we think about this in a conservative way, right? We just came off of a dividend restructure. And so we want to be prudent here. AFFO, as you know, for us, given the real estate financing platform is maybe not the best indicator sometimes in terms of dividends. So I think the short answer to the question is we'll raise it when we feel we responsibly can. To Matt's point, we don't want to go over dividend, and we also don't want to trip the taxability concerns on the downside. So we're looking at it. I don't know if we will grow as AFFO per se, depending on how big the real estate financing program is. But yes, we're looking at it. We will raise it responsibly, but certainly don't want to over-raise it too soon, especially given our recent journey. So I think you'll see it moving in the future. I don't think you're going to see us do anything in the next quarter or so just based on where we stand.

That's helpful. And then the $95 million term loan that's coming due next May. Should we think about proceeds from these financings that might be repaid is what will be used to pay down that loan? Or would you refinance it? How should we think about your plans there?

Yes, certainly. So we have our primary credit facility, the revolving line of credit that matures the 1st of January '27, and the term loans associated with that primary credit facility the 1st of January 2028. So already engaged with the bank group, and we will look to both our side term loans to wrap them up in that primary credit facility. So we have a number of different options. We can always go back to the market and do another debt private placements, and get some long-term fixed-rate bonds there to replace that. We can wrap that into the primary credit facility or I'm sure our lending partner on that term loan that matures in May may want to reissue at those same levels. So many different options and yes, we've already reengaged with the partners to start working through that.

All right. And then last question for me, just on Allied Harbor Point. You said stabilization by mid-next year. It's already 67.6% lease. So I'm just curious, is it fully built out like could it be 100% occupied today? Or is there still some work to do to be able to lease that up to stabilization?

So Jon, we're materially there. The challenge for us, and this is what we talked to the market about since -- since bringing this idea to fruition was balancing this equilibrium, not cannibalizing the 2 assets next door. So yes, it can be fully leased up. We're just very -- we're very mindful about not bottoming out our piece of the market there. So we said to the market back in September, we were looking at a roughly 24 months. Stabilization, to your point, we will probably hit that sooner. We just want to be conservative with what we're putting out there in case we need to hold rates, right? The economic equation is much better. We can hold the rates up and fill the building, take a couple of extra months and it would be kind of cannibalizing our own position in the other 2.

Our next question -- there are no further questions at this time. I will now turn the call over to Shawn Tibbetts for closing remarks. Please go ahead, sir.

Thank you, and thank you all for joining us today. We appreciate our investors' partnership with us, both on the equity and the credit side, our partners who do businesses with us in these submarkets in each of our markets throughout the Southeast United States. Thank you to our team. Thank you to our Board. We appreciate your attention to our story. We look forward to continuing to create value for the long run. Thank you very much, and have a nice day.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to the Amanda Hoffler 2025 Earnings Conference Call. [Operator Instructions] 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 low 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 replay 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 3 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 mentalities 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 rightsize 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 noncash 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 fluctuation 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 think to cap it off to the point, we've got some upside opportunities and faster lease-up and that's the reason we took the rest of the position -- part of the reason we took the rest of the position in that asset at Harbor Point. So yes, I think we feel good about the range. We feel good about 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?

Sure. Well, I'll say the team did a nice job negotiating the downsize of WeWork. They do remain in one floor, which leaves us with 31,000 feet of vacancy. We predicted and broadcast this back in April of 2024, and we're fortunate to have continuous rent payment through the quarter here. I'll say this, we're early in the process as a result. We're just receiving the space back. There's an internal staircase there, some structural kind of enhancements that we need to make there. I would say from a marketing perspective, again, we're early in the process, but certainly, you could see a demising of the space. Obviously, we hope we could get a full floor user -- but I would say it's too early to call that, shot, but we do have some interest, and we'll continue to work on that.

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.

[Operator Instructions] And 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 would have seen that our net debt leverage metric tick up a little bit here at the -- this quarter. That was because the Allied came on with the $90 million loan that we refinanced when we brought that on balance sheet. As EBITDA continues to come through, we expect that to come down into the 7.4x, 7.5x range at the end of this year, but that obviously depends on how quickly we can stabilize, not just the Allied, but also Southern Post. What I would caution, Rob, on that when we're looking at these predictions is depending on the capital structures for these a couple of assets that Shawn noted that may potentially come online from our mezzanine portfolio will obviously have an effect on that. But we are -- as we've committed to trying to bring leverage down over the long run and rightsized not just the quality of debt, but the amount of debt we have on our balance sheet.

Okay. And then lastly, Shawn, beyond the sort of 50-50 office retail asset that you talked about potentially selling, how are you and the Board thinking about other strategic dispositions over the next 6 to 12 months? Is there a target that you're looking at in terms of dollar value? Is there also -- how are you guys also thinking about the mix between selling down apartments to redeploy into apartments, selling retail, selling sort of one-offs like the South Bend asset, et cetera? How are you guys thinking about -- or how should we be thinking about you guys selling stuff over the next 12 months or so?

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. And 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.

Good morning, ladies and gentlemen, and welcome to the Armada Hoffler First Quarter '25 Earnings Conference Call and Webcast. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. This call is being recorded on Thursday, May 8, 2025. 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 First 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 first 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 June 7, 2025. 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 made herein are as of today, May 8, 2025, and will not be updated subsequent to the initial earnings call. During this call, we made 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 hard 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 yesterday and the risk factors disclosed in the documents we have filed with or 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 first quarter results and provide some perspective on where we're headed for the remainder of the year and beyond. The first quarter was highly productive, reflecting our focus on operational excellence and the core goal of quality. As you can see from the release, all of our property types performed well, and we delivered a strong result with normalized FFO of $0.25 per diluted share. With portfolio occupancy holding steady at a minimum of 95% over the past four quarters, we are reaffirming our full year guidance. Our office assets remain essentially fully occupied at 97.5%. The remaining 2.5% is well inside a market vacancy factor. It is an especially good time to be concentrated in highly-immunitized, mixed-use environments where we benefit from a more fluent multifamily renter base and strong, stable office occupants, both of which are attracted to and support a curated mix of retail and entertainment offerings. These settings create natural synergies that align with our evolving tenants and consumer preferences, positioning us for sustained success. Additionally, both our shopping centers and apartment communities remain defensive by nature, supported by demand for everyday goods and services, particularly grocery and necessity-based retail. When looking at the 25% of retail outside of our mixed-use environment, 40% of this AVR comes from those with grocery anchors or shadow anchors. This strategic mix of asset classes and location reinforces our ability to drive steady performance. We are pleased with the strong performance delivered across all segments of our portfolio, office, retail, and multifamily. Our properties demonstrated solid fundamentals this quarter, with both our office and retail assets achieving double-digit GAAP renewal spreads and a blended 2.6% growth rate for new and renewed multifamily leases. The positive releasing activity in our commercial portfolio demonstrates our ability to simultaneously grow rents and extend lease terms. While the construction activity met expectations in the first quarter, a few construction projects across the balance of the year have come out of our guidance. As we have previously communicated, our business strategy continues to shift away from reliance on fee income, with an increased emphasis on driving higher-quality property-level earnings. We believe the increased property-level performance, coupled with expense management, will help to offset the decreased construction income for the remainder of the year, thus our unchanged guidance. Before we move on, I'll make a few comments on the broader economic landscape. It's clear that external factors like tariffs and ongoing macroeconomic uncertainty are top of mind for all businesses right now, and we are no exception. We are fully focused on those things that we can control. For us, control in this context is a disciplined approach to managing costs, seeking operational efficiencies, and making strategic decisions that position us for long-term success. We will continue refining our business model by reviewing all levels of expenses to ensure that we are most efficiently and properly stewarding our resources. An example of this is our 2025 G&A reduction of 13% year-over-year, achieved with tighter cross controls and reduction in executive headcount. We are confident we can continue to deliver value through this challenging environment by remaining agile and always maintaining a proactive posture, looking for opportunities to unlock value, whether that means disposing of a fully stabilized asset with less growth at aggressive cap rates or unearthing value through redevelopment. Since the beginning of the year, we spent a significant amount of time on the road, meeting directly with our shareholders and investment partners. These conversations have been invaluable, providing opportunities to reinforce our conviction in the company's long-term, quality-focused strategy, which is to reduce the complexity of the business model while improving the balance sheet. As part of the improvement of the balance sheet, in mid-March, we reset our quarterly dividend to $0.14 per share. This was a difficult but necessary decision that we made with long-term value creation in mind. The new dividend level is now fully supported by operating property cash flow. This change reinforces our broader goal of delivering sustained, durable, and predictable returns while also increasing fiscal flexibility for the company. We are in a solid financial position and feel very comfortable that we can sustain this more appropriate level of dividends into the future. In the first quarter, we experienced continued momentum across the portfolio with above 95% occupancy across all three segments. Commercial leasing was robust, with 320,000 square feet transacted during the quarter. Additionally, our office has no material lease expirations through 2027. Multifamily remains strong at 95% occupancy, and we are seeing signs of supply absorption in key Sunbelt markets like Atlanta and Charlotte. Retail remains solid, with demand for well-located space driving continued leasing activity and positive spread. Our retail portfolio remains resilient amid broader retail headwinds, including closures by tenants such as Party City, Conn's and JOANN Fabrics, representing roughly 115,000 square feet of space in our portfolio. However, I'm pleased to share that as of today, there is tenant interest on all of this space, with over 85% already under lease, or LOI, to higher credit quality tenants at 25% higher rents. These leasing successes reflect the strength of our locations, as well as our proactive approach to tenant rollover and repositioning opportunities. The Interlock, our mixed-use asset in West Midtown Atlanta, in partnership with Georgia Tech, has made tremendous progress over the last several quarters, reaching materially full occupancy as we committed. The retail component is currently 98% lease, underscoring the strong demand for space in this vibrant, walkable neighborhood. During the quarter, we announced the marquee new lease with F1 Arcade, the world's first Formula One-themed hospitality and entertainment brand, backed by Liberty Media, the owner of Formula One, which will occupy over 15,000 square feet of first-generation space at the Interlock. This dynamic concept will further elevate the experience-driven energy of the project. On the office side, we are currently 94% lease with only 11,000 square feet available for lease with current interest and no rollover this year or next. We executed three new office leases totaling approximately 23,000 square feet, reinforcing our belief that well-located, high-quality office space in mixed-use environments remains highly desirable for a wide range of tenants. At Harbor Point, we are thrilled to welcome T. Rowe Price to their new global headquarters as of the first week of March. Having T. Rowe officially on-site in our Harbor Point ecosystem is a major milestone for the community and a testament to the long-term vision we've executed on at Harbor Point. We announced Monday that we entered into a binding term sheet with our partner to acquire our partner's full interest in allied apartments, where leasing is actively progressing with 39% currently leased. We have received positive feedback from residents that have moved in over the past few months. We're also preparing to welcome an exciting roster of new retailers all opening this summer that will complement the existing merchandising mix and further enhance the vibrancy and amenity base of the neighborhood. I'm pleased to report that Chandler Residences, located within the mixed-use community of Southern Post, has successfully achieved stabilization with 95% lease. Southern Post combines residential leasing with thoughtfully curated retail, dining, and office components, creating a vibrant, walkable community. On the commercial side, Southern Post is currently 72% leased, or LOI. This includes all retail space, reflecting strong tenant demand and the project's growing momentum. Two new restaurants are scheduled to open their doors in the coming weeks, further activating the street-level experience and enhancing foot traffic through the site. Multifamily fundamentals remain solid. We reported a healthy combined trade-out of 2.6% for the first quarter, supported by strong retention and disciplined rent growth strategies. April has meaningfully improved as a result of some short-term leases with renewal spreads holding strong at 5.1% and new lease spreads rebounding to 4.1%. We look forward to continued demand in our markets and capturing rent growth while maintaining high occupancy and resident satisfaction. Our momentum further validates our strategic position heading into the prime leasing season. Our 2018 vintage community, Greenside and Charlotte, has experienced leaks that impacted the exterior of several units, and we are using this as an opportunity to complete a thoughtful improvement throughout the building, enhancing their overall appeal and value. As a result, some of the units are offline as we complete work in phases over the next 10 to 12 months. Given the property's prime location in Midtown, less than a mile from the new Pearl Innovation Medical District, we are confident that we will realize the return on these capital investments once completed. The impact of this has been contemplated in our earnings guidance for this year. As part of our long-term strategy, we are closely evaluating redevelopment opportunities within our existing portfolio, allowing us to unlock incremental value and drive future growth. We have added a section to the supplemental to detail these opportunities on page 25. These efforts are focused on enhancing high-performing assets and capitalizing on underutilized real estate that can be repositioned to meet evolving market demand. A great example is our ongoing work at Columbus Village, adjacent to Town Center Virginia Beach, where we are redeveloping the former Bed, Bath & Beyond store. As we mentioned on the last call, this project will bring in a highly sought-after national grocer and golf galaxy, complementing Town Center's current offerings and increasing traffic to the center, while representing a 51% rent premium. We view this as a replicable model using our holistic approach and mix of asset classes to strategically allocate capital and resources in proven locations. Another example is our plan to monetize an undeveloped out parcel at Southgate Square for a new drive-through coffee location, which will activate excess land, drive additional traffic to the center, and enhance the property's overall income stream. We are also in the process of moving our Liberty Apartments leasing office from its current footprint to a more efficient nearby retail space. This move will allow us to repurpose the former leasing area into additional apartments, capitalizing on the strong demand for this community. Redevelopment is a key lever we will use to create value and enhance the quality of our income stream, while maintaining a disciplined approach to capital deployment. Before we wrap up, I would like to take a moment to recognize the recent addition of Jennifer Boykin to our Board of Directors. Jennifer brings tremendous leadership experience and a strong operational background, most recently serving as EVP of Huntington Ingalls Industries and President of Newport News Shipbuilding. Her insights and perspective will be incredibly valuable, and we are excited to welcome her to the team. We remain focused on value creation through disciplined execution, thoughtful reinvestment, and managing risk. As the year progresses, we are positioned to benefit from our upcoming multifamily deliveries, as well as the continued maturation and ultimate stabilization of our development pipeline. We are acting with intentionality, building a stronger, simplified, and more consistent Armada-Hoffler, one that is more efficient, more balanced, and creating more reliable earnings growth over time. Ultimately, one that is more aligned with creating long-term shareholder value. I'm proud of the progress we've made so far, and I'm excited about the future. And I'm confident in the execution of our strategy. I'll now turn the call over to Matt.

Good morning, and thank you, Shawn. Armada-Hoffler delivered a strong start to the 2025 fiscal year, demonstrating the resilience of our diversified portfolio and disciplined operating model. For the first quarter, normalized FFO attributable to common shareholders was $25.6 million, or $0.25 per diluted share, slightly above our expectations for the period. Net operating income for Q1 was $42.2 million, representing a 2% increase year-over-year and $600,000 better than budgeted. FFO attributable to common shareholders was $17.2 million, or $0.17 per diluted share. AFFO totaled $20.4 million, or $0.20 per diluted share. Once we subtract the non-cash interest income, this results in $0.16 per diluted share, which is above our cash dividend as detailed on page 19 of the supplemental. Our mixed-use portfolio continues to perform exceptionally well, especially in the office segment. Same-store office NOI increased by 9.2% on a GAAP basis and 6.3% on a cash basis. Office occupancy remained high at 97.5%, and office releasing spreads rose by 23.3% on a GAAP basis and 3.7% on a cash basis. Multifamily leasing performed well in Q1, with new lease growth and renewal growth both contributing meaningfully, reporting a blended rate for the quarter of 2.6%. Multifamily releasing spreads were 5.4%, with new leases reporting negative 1%. These spreads continued to perform well in April, increasing to 5.1% and 4.1%, respectively. Rent collections remain strong and tenant demand across our residential portfolio remains healthy. In our retail segment, performance remains steady. Leasing activity remains robust at our grocery anchored centres, and our mixed-use retail assets consistently achieve high occupancy levels, maintaining above 95% as the complementary blend of residential, retail and office components creates a self-reinforcing ecosystem of demand, driving stability across economic cycles. Our balance sheet remains a key focus of the management team. For the quarter, net debt to total adjusted EBITDA stood at 7.1 times at quarter-end, with our stabilized leverage at 5.4 times. Relative to our historic performance, we maintained strong liquidity of over $211 million. We also completed our hedging transaction during the quarter for $150 million notional amounts, with a swap fixed rate of 2.5%, mitigating exposure to further interest rate volatility. We continue to operate with the expectation that interest rates may remain elevated longer than previously anticipated. Our balance sheet strategy emphasizes flexibility, allowing this management team to navigate through this environment whilst providing us options to fund growth when needed. We also recognize that debt capital markets remain selective. Our proactive approach to liquidity and disciplined deployments ensures that we can fund our current development commitments and, when appropriate, invest without undue balance sheet pressure. Prudent cash management is foundational to our approach, particularly in today's uncertain economic environment. In March, the Board of Directors made the strategic decision to right-size our dividends and better align with projected property cash levels, ensuring a sustainable payout that supports both shareholder returns and long-term balance sheet strength. As Shawn mentioned, maintaining sufficient liquidity to fund operations, service debt and supporting our dividend from the cash flows generated by owned properties is paramount to the company's success. We proactively stress-test our cash flow model under a range of downside scenarios, including a potential recessionary environment, higher for longer interest rates and moderate leasing activity. Following our recent dividend right-sizing, our adjusted funds from operations for the quarter and on a projected run rate basis is well positioned to fully cover our dividend obligations, even under stress scenarios. This updated approach by management ensures that we are able to preserve balance sheet flexibility, protect our core distribution to shareholders and retain capital for strategic investment opportunities that may emerge over the course of the cycle. Finally, I would like to highlight a very important point on expenses. General and administrative expenses are projected to decrease by 13% year-over-year, reflecting our conscious and ongoing efforts to manage costs prudently. Given the year-over-year reduction in earnings, we are taking deliberate steps to align G&A with the scale of our current operations while still supporting our strategic priorities. Fiscal responsibility remains a cornerstone of our operating philosophy, as demonstrated by a better than expected performance in the first quarter and will maintain a tight focus on expense control throughout the remainder of the year. For the remainder of the year, we will continue to focus on strengthening the stability of our cash flows supporting both future growth and a consistent sustainable dividend, driving operating efficiencies through strategic investments in technology and process improvements, which continue to enhance margins over time. We remain disciplined in our execution, selectively advancing projects that offer attractive risk adjusted returns. We are fully aware that transaction volumes across the real estate market have slowed. Our mid-term growth will primarily driven by the stabilization of the development pipeline and continued leasing activity which positions us well in the current environment. Fortunately, with our strong internal pipeline this year, our model does not include external acquisitions to drive growth, other than bringing online the allure multifamily assets from our real estate financing portfolio. Given our first quarter performance and our current line of sight for the remainder of the year, we are reaffirming our full year 2025 normalized FFO guidance of $1 to $1.10 per diluted share. Even with the headwinds that Shawn mentioned in our construction entity, we are confident that our strategy, combined with our new leadership and diversified portfolio, positions Armada Hoffler to deliver for the shareholders. Thank you for your time and support. With that, I will now turn over to Shawn for his closing remarks.

Thanks, Matt. I want to thank everyone for joining us today and for your continued interest in Armada Hoffler. We remain focused on executing our short-term strategy, delivering strong operational results and creating long-term value for our shareholders. As always, I want to thank our dedicated team for their hard work and commitment. We look forward to updating you on our progress in the quarters ahead. Thank you for joining us. Operator?

Thank you, Shawn. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And your first question comes from Andrew Berger with Bank of America. Please go ahead.

Great. Good morning. Thank you for all the color in the opening remarks. Maybe just sticking with kind of high-level, Shawn, you touched on the macro a bit and appreciate the color and the cost savings. And it does sound like obviously it slowed the construction pipeline a little bit. But just curious, has the macro uncertainty, the tariff conversations, has that translated to any changes in your office or retail leasing conversations? Have tenants brought this up as a concern or maybe caused any delays? Or has it really kind of been more limited to on that construction side?

Andrew, thank you for the question and good morning. I think the latter is what we're seeing. As you can see, we've been very busy executing new and renewal leases. So I think the activity on the portfolio side has not seen that to-date. And frankly, we're seeing strength in that space. So I think that's good. Again, we can't control the macro environment, to your point, but new starts are probably going to be softer. And that's what we're seeing in the construction side. So thankfully for us, the value of the portfolio continues to shine as we're able to maintain the guidance here, even given some softness in the construction space.

Great. Thank you. And I think you touched on this a couple of times in the opening remarks, Matt. I know you mentioned it at the end, but you said you want to maintain some optionality to invest strategically over the course of the cycle as opportunities arise. And could we just get your latest thoughts, obviously, appreciate there might not be anything immediate term, but as we get a couple of years out, do you want to see more of these mixed use communities? How open are you to office, maybe versus the other asset classes, just your latest thoughts on the portfolio composition and whatnot?

Sure. I think in the short run, both disposition and acquisition are probably challenging, given the lack of recent trades and the uncertainty in the market. So I'm not sure we would feel comfortable going to market to either acquire or dispose in the short run. In the longer term, as you know, we are very equipped to operate and develop, if necessary, mixed use communities. And we believe these ecosystems continue to drive, frankly, drive value in markets such as this. And so, if we see an opportunity, we'll prepare to strike, but I don't see that happening this year, if you will, but we'll continue to keep our eyes peeled. We don't want to rule anything out, but I think, to answer your question, we are always looking for an opportunity to use our competency, and I would characterize one of our main competencies as operating and executing on these mixed use ecosystems. In terms of office, I think the jury, from a market's perspective, is still out. I will, quick commercial here, say our office is 97.5% occupied, frankly, and we're happy with that. I hope the market continues to become happier about our office product, and we'll continue to advertise that. But I don't think you're going to see us rush out to do an office. That being said, we are comfortable with the office that we do have, and it's primarily, as you know, located in a mixed use community, so back to the mixed use story and kind of our core competency.

Great. Thank you. And if I could just squeeze in one more kind of on that point with office, the leasing spreads have been pretty strong over the last couple of quarters. I think they've averaged over 20% the past four quarters. So I'm just curious, kind of a two-part question. One, what type of annual escalators are you baking into those leases? And obviously, not much rolling over the next year or two. I know you said you've addressed most of the major expirations and obviously not much space to lease over 97% occupied, but how sustainable would you say those spreads are, looking out over the next couple of years, just kind of based on in-place rents, escalators, and today's market rents, assuming no major changes?

Yes, I think to your point, we're pretty well set, I mean, knock on wood, right? Like, but in terms of the office leases that we have -- let me say it this way. We typically see 2% to 3% escalators every year, but we're getting term on these leases, 10-year term. And so I think that's what is providing the spread for you, but also this kind of comfort level of this long-term arrangement with credit tenants. So the demand plus -- the demand here allows us to, not just here in Town Center, but in our office product, allows us to achieve the 2% to 3% annual escalators, but also that longer term, which is creating that spread. So we feel good about that, we're happy with that, and again, we've primarily focused on taking the risk off the table in the office space. And I think it's hard to argue with the occupancy and the lack of rollover, if you will, in the short run, or the midterm for that matter.

Great. Thank you very much.

Thank you. Your next question comes from Viktor Fediv with Scotiabank. Please go ahead.

Well, good morning, everyone, and thank you for taking my question. I have a question on the kind of retailer's tenant watch list. I know you mentioned a couple of tenants that went bankrupt already, and you have already, if I'm not mistaken, 85% of allies or interest for these spaces, but just trying to understand what are the next potential problem tenants, and what is your exposure to those ones?

Sure. I think -- thank you for the question, Victor. I think, from my perspective, and Matt may have some more color on this if he'd like to add, but there are three names top of mind, and they are JOANN, Party, City, and Conn's. And as I said in the prepared remarks, 85% of that is currently -- we're at the table either lease or under LOI, at lease or under LOI with those at 20% to 25% higher rents. And I think, in my mind, that's a proxy for that type of space. There are people, I think, lining up may be strong, but there are people knocking on our door wanting to talk to us about that space, and frankly, I feel very good about the fact that 85% of it, our team has paper on, so that's exciting for us. Are there small mom and pop shops out there, 1,000, 2,000, 3,000 feet, sure, but I think, back to my comment previously to Andrew, I think we're in the process, if not already, of taking the major risk off the table. I mean, the renewal, for instance, in Nordstrom Rack, 32,000 feet, that was a big one for us. We kicked that out five years, and that's the type of thing we want to do. Like I said, are there smaller pieces out there? Yes, we're working on those. But I think we've mitigated, by and large, the big pieces of the portfolio that would be concerning on a short- to mid-term basis.

Got it. Thank you. And then, sticking with the risks, but probably switching to multifamily segment, in particular Baltimore submarket, do you see any impact from rest and Johns Hopkins cut in financing, and in particular, because you have new asset coming online there, is there any cannibalization in occupancy as well, so just trying to understand some color for that submarket and multifamily component?

Sure. To-date, we haven't seen, or at least we can't tell if there's an impact from the Johns Hopkins funding situation. I would say we have seen some of our residents interested in assigning leases next door at Allied which we think is a good thing. Occupancy seems to be holding, and the rate seems to be holding. And as we said to the market, we want to be very careful here that we don't cannibalize ourselves. But certainly, I think it's a testament to the quality of the product that's being offered up there, that our tenants are essentially, our residents are essentially moving from one high-quality asset, trophy asset, to a newer trophy-quality asset. And look, we've done a lot of calculus on this, and that's as far back as two years ago, I've been conveying to the market that we want to be very careful about the lease up. We do get questions about stabilization, and we've said, hey, look, this needs to be thinking 18 to 24 months such that we can maintain the market rents that we want to maintain to keep a healthy ecosystem there. So I think there's also the added benefit of T-Rowe employees and the added traffic in that area. There are a couple of thousand more employees there, and people are coming back to the office more than they were two years ago, so I think these are all, in my mind, drivers of increased demand over time relative to where we may have been 12 to 24 months ago.

Got it. Makes sense. Thank you.

Yes, sir.

Thank you. [Operator Instructions]. Your next question comes from Rob Stevenson with Janney. Please go ahead.

Good morning, guys. Shawn, to ask the tenant question a little bit differently. You have leases on, I guess, a little over 6% of the entire portfolio rolling over the remainder of '25 and about 12% of the retail portfolio in '26. Any tenants of impact that have either told you that they aren't renewing or look like that they may be iffy to renew, maybe not on a tenant watch list, but just because of whatever their changing needs are space-wise or location-wise that might not renew that might impact you guys looking forward?

Yes, I think let's start with -- thanks, Rob, for the question and good morning. Let's start with what I would say is the biggest rollover upcoming, it's in the retail space. It's in Office Depot in Durham, 28,000 square feet. We think they may not renew, and frankly, we have the backfill identified, and we're working on that as we speak. There's a Staples that we're in discussion with. We think they are going, by the way, that's 19,000 feet that all indications are they're going to renew. The other renewal in '25 is a Ruth's Chris store here in Virginia Beach. We've renewed that post-first quarter for 10 years, so that's in quarter two. You'll see that in the stats in quarter two. '26 , there's a Safeway for 55,000 feet. We renewed for five years. There's a Harris Teeter for 52,000 feet, the best performer in the market, so there's a high indication that they're going to renew. If not, I'm sure somebody will want to step into that, another high-end grocer step into that space. I think we'll see renewals. The most work, I think what I'm saying to you, Rob, needs to be done on that Office Depot and locking up that 28,000 feet with the backfill that we're talking to.

Is it likely, if it winds up coming back to you, is that likely to be a multi-tenant space or at 28,000 square feet? Where is that tenant pool deep enough to release that at this point?

We've got options that could do both. I think, from my perspective, if we can fill it with a high-quality tenant that's able to absorb that space, so be it, if not, we can arrange a situation like we've done at Bed Bath here in Virginia Beach and have a two- or three-tenant, but we're comfortable that there's not a lot of drag there. That deal expires on the 31st of this year, so expect to have us having some more tangible conversation with you in the quarters to come.

Okay. And then back to your earlier comments about the disposition market being, I guess, a bit frozen to paraphrase you. If one of the options comes up to purchase one of the apartments out of the Mez portfolio, if the disposition market doesn't allow you, I assume that, given the cost of common, you probably wouldn't issue equity here, are you guys comfortable with temporary leveraging up using the line of credit to close a deal to get a high-quality apartment property in the mix? Do you push that out if that's the option? How are you guys thinking about that at this point in time?

Yes, I think to your point, we don't want to take anything off the table, Rob, right? But if there were something attractive enough for us to look at, we would want to, to your point, kick the can on it and see if we can't keep a line of sight on it for long enough to get maybe some better capital availability or arrangement in place. My comment about disposition, please don't make a mistake. I have people calling all the time about wanting to buy assets. My view on this is, let the market settle down a little bit so that we can really understand what comps are. I'm not sure there are great comps out there right now. Back to the acquisition side, I mean that's certainly a source of capital. If we saw something we wanted, we can trade quickly and purchase it, assuming that it's fitting within our core strategy and that the sponsor developer is willing to sell it to us at a price that works. So I think, yes, a lot of algebra there, but to answer your question, we're not wild about obviously selling common at the price as we said today, and obviously, we're sensitive to leverage. I think there's a little bit of a dance there. Matt, you want to add anything to that from the balance sheet standpoint?

Just as a great question, Rob, just to say that we have spent a lot of time over the last year or so trying to be very disciplined and we're working very hard to get the leverage in a range that the investors, the shareholders are more comfortable with. So as Shawn said, there'd be some puts and takes on the algebra there and the calculation, but we've committed to the market that we're going to be disciplined capital allocators and we would have to look at that holistically with respect to where our cost of capital and where the cost of debt is today.

Okay. And is T-Rowe now paying full rent or is there still ramp up left in that lease to get full rent for them?

Yes. So T-Rowe started paying rent or they have been paying rent back since August. The rent commencement date and the move in was March 7th. Obviously, as the project closes out, there will be a true up here in the last little bits as the contractor finishes and finalizes that.

But you're recognizing rent as of March 7th?

Yes, we're recognizing rent, not prepaid, recognizing true rent as of March 7th.

Okay. So the second quarter should be a full, represent a full quarter of GAAP rent for T-Rowe?

Yes. And Rob, you will see that for us come in as a FFO contribution. It's an off balance sheet JV. So our 50% comes back as an FFO contribution after debt service has been taken at the property level.

Okay. And then last one for me, there's five redevelopment projects listed in the supplemental totaling a little over $19 million. Have all of those projects started and are they already sort of either in the $80 million construction backlog or flowed through previous numbers? Just trying to get a feel for whether or not some of those haven't started and will hit the backlog at some point or whether or not that's basically already accounted for in the backlog, either past or present?

Got it. Thank you. I think probably the best way to run through these five, they're relatively small, Rob, to your point. So it's not going to be a tremendous kind of bubble in the backlog. Liberty Apartments is nearly complete. You're probably looking at a Q3 kind of lease up. I think actually we've already signed paper for residents on those two, on those apartments. So that's an awesome, kind of small but awesome uplift story there. Columbus Village should be in the numbers. It's in progress, as you know. We're looking at Q4 for the retailers. Potentially the grocer will slide into Q1 of next year. Let's see, Southgate Square still working on that deal, so that's not in a number yet. Consolidation of company operations, that's kind of an internal move here. You haven't seen that yet, and then Brook Square, still talking to the kind of site work early planning folks on that one. But to be clear, these would not be in backlog because they're internal development projects, right? So you're not going to see that in the third party backlog. Some of that may show up in our kind of broader backlog or broader work scope, but they won't be in the third party backlog, as you know. We won't be able to recognize field notes.

Okay. Thanks, guys. Appreciate the time.

Yes. Thank you, Rob.

Thank you. There are no further questions at this time. I would like to turn the call back over to Shawn Tibbetts for closing remarks.

Thank you all for joining this morning. We appreciate your attention, appreciate all the questions. Just to our team who's listening out there, our partners, our investors, we appreciate your confidence in us. We look forward to continuing to improving the quality of this story and this great company. And I look forward to talking to you on the road in the next quarter, and again, appreciate your support. I hope you have a nice weekend. Take care.

Ladies and gentlemen, this concludes today's conference call and webcast. Thank you so much for your participation. You may now disconnect.