UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM	10-Q

☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2019~~March 31, 2020

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35908

ARMADA HOFFLER PROPERTIES, INC.

(Exact name of registrant as specified in its charter)



Maryland				46-1214914
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)
222 Central Park Avenue		,	Suite 2100
Virginia Beach	,	Virginia		23462
(Address of principal executive offices)				(Zip Code)

(757) 366-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	AHH	New York Stock Exchange
6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share	AHHPrA	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

As of ~~July 31, 2019,~~May 1, 2020, the registrant had ~~52,982,147~~56,492,059 shares of common ~~stock, $0.01 par value per share, outstanding and 2,530,000 shares of preferred~~ stock, $0.01 par value per share, outstanding. In addition, as of ~~July 31, 2019,~~May 1, 2020, Armada Hoffler, L.P., the registrant's operating partnership subsidiary, had ~~21,052,574~~21,272,962 units of limited partnership interest ("OP Units") outstanding (other than OP Units held by the registrant).

ARMADA HOFFLER PROPERTIES, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED ~~JUNE 30, 2019~~MARCH 31, 2020

Table of Contents



		Page

Part I. Financial Information		1

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Comprehensive Income	2

	Condensed Consolidated Statements of Equity	3

	Condensed Consolidated Statements of Cash Flows	5

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2523

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4346

Item 4.	Controls and Procedures	4446

Part II. Other Information		4548

Item 1.	Legal Proceedings	4548

Item 1A.	Risk Factors	4548

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4849

Item 3.	Defaults Upon Senior Securities	4850

Item 4.	Mine Safety Disclosures	4850

Item 5.	Other Information	4850

Item 6.	Exhibits	4951

Signatures		5052

PART I. Financial Information

Item 1. Financial Statements

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Balance Sheets

(In thousands, except par value and share data)


	June 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
	(Unaudited)						(Unaudited)
ASSETS
Real estate investments:
Income producing property	$	1,407,224		$	1,037,917		$	1,465,882		$	1,460,723
Held for development	2,752			2,994			13,607			5,000
Construction in progress	156,695			135,675			155,672			140,601
	1,566,671			1,176,586			1,635,161			1,606,324
Accumulated depreciation	(205,650		)	(188,775		)	(235,249		)	(224,738		)
Net real estate investments	1,361,021			987,811			1,399,912			1,381,586
Real estate investments held for sale	—			929			—			1,460
Cash and cash equivalents	23,109			21,254			48,096			39,232
Restricted cash	2,852			2,797			4,692			4,347
Accounts receivable, net	20,713			19,016			22,831			23,470
Notes receivable	144,743			138,683
Construction receivables, including retentions	13,696			16,154
Construction contract costs and estimated earnings in excess of billings	461			1,358
Equity method investments	—			22,203
Notes receivable, net							178,652			159,371
Construction receivables, including retentions, net							35,051			36,361
Construction contract costs and estimated earnings in excess of billings, net							458			249
Operating lease right-of-use assets	33,268			—			32,997			33,088
Finance lease right-of-use assets	24,415			—			23,983			24,130
Acquired lease intangible assets, net							65,014			68,702
Other assets	105,749			55,177			34,404			32,901
Total Assets	$	1,730,027		$	1,265,382		$	1,846,090		$	1,804,897
LIABILITIES AND EQUITY
Indebtedness, net	$	949,345		$	694,239		$	1,006,617		$	950,537
Accounts payable and accrued liabilities	15,983			15,217			15,768			17,803
Construction payables, including retentions	37,798			50,796			50,161			53,382
Billings in excess of construction contract costs and estimated earnings	1,789			3,037			6,311			5,306
Operating lease liabilities	41,300			—			41,512			41,474
Finance lease liabilities	17,862			—			17,916			17,903
Other liabilities	59,508			46,203			69,404			63,045
Total Liabilities	1,123,585			809,492			1,207,689			1,149,450

Stockholders’ equity:
Preferred stock, $0.01 par value, 100,000,000 shares authorized; 6.75% Series A Cumulative Redeemable Preferred Stock, 2,530,000 issued and outstanding as of June 30, 2019 and zero shares issued and outstanding as of December 31, 2018	63,250			—
Common stock, $0.01 par value, 500,000,000 shares authorized; 52,794,357 and 50,013,731 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	528			500
Preferred stock, $0.01 par value, 100,000,000 shares authorized: 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, 2,930,000 shares authorized, 2,530,000 shares issued and outstanding as of March 31, 2020 and December 31, 2019							63,250			63,250
Common stock, $0.01 par value, 500,000,000 shares authorized; 56,492,134 and 56,277,971 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively							565			563
Additional paid-in capital	394,269			357,353			457,804			455,680
Distributions in excess of earnings	(95,490		)	(82,699		)	(115,390		)	(106,676		)
Accumulated other comprehensive loss	(4,502		)	(1,283		)	(9,393		)	(4,240		)
Total stockholders’ equity	358,055			273,871			396,836			408,577
Noncontrolling interests in investment entities	4,550			—			4,370			4,462
Noncontrolling interests in Operating Partnership	243,837			182,019			237,195			242,408
Total Equity	606,442			455,890			638,401			655,447
Total Liabilities and Equity	$	1,730,027		$	1,265,382		$	1,846,090		$	1,804,897

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Comprehensive Income

(In thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Revenues
Rental revenues	$	36,378		$	28,598		$	67,287		$	57,297		$	42,289		$	30,909
General contracting and real estate services revenues	21,444			20,654			38,480			43,704			47,268			17,036
Total revenues	57,822			49,252			105,767			101,001			89,557			47,945
Expenses
Rental expenses	8,027			6,522			14,752			12,946			9,375			6,725
Real estate taxes	3,451			2,735			6,579			5,548			4,333			3,128
General contracting and real estate services expenses	20,123			20,087			36,409			42,501			45,550			16,286
Depreciation and amortization	13,478			9,179			23,382			18,457			14,279			9,904
Amortization of right-of-use assets - finance leases													147			—
General and administrative expenses	2,951			2,764			6,352			5,725			3,793			3,401
Acquisition, development and other pursuit costs	57			9			457			93			27			400
Impairment charges	—			98			—			98			158			—
Total expenses	48,087			41,394			87,931			85,368			77,662			39,844
Operating income	9,735			7,858			17,836			15,633			11,895			8,101
Interest income	5,593			2,375			10,912			4,607			7,226			5,319
Interest expense	(7,603		)	(4,497		)	(13,489		)	(8,870		)
Interest expense on indebtedness													(7,959		)	(5,886		)
Interest expense on finance leases													(229		)	—
Equity in income of unconsolidated real estate entities	—			—			273			—			—			273
Change in fair value of interest rate derivatives	(1,933		)	(11		)	(3,396		)	958			(1,736		)	(1,463		)
Other income	4			54			64			168
Provision for unrealized credit losses													(377		)	—
Other income (expense), net													58			60
Income before taxes	5,796			5,779			12,200			12,496			8,878			6,404
Income tax benefit	30			166			140			432			257			110
Net income	5,826			5,945			12,340			12,928			9,135			6,514
Net income attributable to noncontrolling interests:
Net (income) loss attributable to noncontrolling interests:
Investment entities	320			—			320			—			92			—
Operating Partnership	(1,580		)	(1,626		)	(3,210		)	(3,569		)	(2,235		)	(1,630		)
Net income attributable to Armada Hoffler Properties, Inc.	4,566			4,319			9,450			9,359			6,992			4,884
Preferred stock dividends	(154		)	—			(154		)	—			(1,067		)	—
Net income attributable to common stockholders	$	4,412		$	4,319		$	9,296		$	9,359		$	5,925		$	4,884
Net income attributable to common stockholders per share (basic and diluted)	$	0.08		$	0.09		$	0.18		$	0.21		$	0.11		$	0.10
Weighted-average common shares outstanding (basic and diluted)	52,451			45,928			51,692			45,532			56,398			50,926

Comprehensive income:
Net income	$	5,826		$	5,945		$	12,340		$	12,928		$	9,135		$	6,514
Unrealized cash flow hedge losses	(3,459		)	—			(4,462		)	—			(7,489		)	(1,003		)
Realized cash flow hedge losses reclassified to net income	35			—			107			—			392			72
Comprehensive income	2,402			5,945			7,985			12,928			2,038			5,583
Comprehensive income attributable to noncontrolling interests:
Comprehensive (income) loss attributable to noncontrolling interests:
Investment entities	320			—			320			—			92			—
Operating Partnership	(677		)	(1,626		)	(2,074		)	(3,569		)	(291		)	(1,397		)
Comprehensive income attributable to Armada Hoffler Properties, Inc.	$	2,045		$	4,319		$	6,231		$	9,359		$	1,839		$	4,186

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Equity

(In thousands, except share data)

(Unaudited)


	Preferred stock		Common stock		Additional paid-in capital			Distributions in excess of earnings			Accumulated other comprehensive loss			Total stockholders' equity			Noncontrolling interests in investment entities			Noncontrolling interests in Operating Partnership			Total equity			Preferred stock		Common stock		Additional paid-in capital			Distributions in excess of earnings			Accumulated other comprehensive loss			Total stockholders' equity			Noncontrolling interests in investment entities			Noncontrolling interests in Operating Partnership			Total equity
Balance, December 31, 2018	$	—	$	500	$	357,353		$	(82,699	)	$	(1,283	)	$	273,871		$	—		$	182,019		$	455,890
Balance, December 31, 2019																										$	63,250	$	563	$	455,680		$	(106,676	)	$	(4,240	)	$	408,577		$	4,462		$	242,408		$	655,447
Cumulative effect of accounting change⁽¹⁾	—		—		—			(125		)	—			(125		)	—			(42		)	(167		)	—		—		—			(2,185		)	—			(2,185		)	—			(824		)	(3,009		)
Net income	—		—		—			4,884			—			4,884			—			1,630			6,514			—		—		—			6,992			—			6,992			(92		)	2,235			9,135
Unrealized cash flow hedge losses	—		—		—			—			(752		)	(752		)	—			(251		)	(1,003		)	—		—		—			—			(5,438		)	(5,438		)	—			(2,051		)	(7,489		)
Realized cash flow hedge losses reclassified to net income	—		—		—			—			54			54			—			18			72			—		—		—			—			285			285			—			107			392
Net proceeds from issuance of common stock	—		21		30,185			—			—			30,206			—			—			30,206			—		1		1,348			—			—			1,349			—			—			1,349
Restricted stock awards, net of tax withholding	—		1		754			—			—			755			—			—			755			—		1		782			—			—			783			—			—			783
Restricted stock award forfeitures	—		—		(4		)	—			—			(4		)	—			—			(4		)	—		—		(6		)	—			—			(6		)	—			—			(6		)
Redemption of operating partnership units	—		1		1,259			—			—			1,260			—			(1,260		)	—
Dividends and distributions declared ($0.21 per share and unit)	—		—		—			(11,009		)	—			(11,009		)	—			(3,568		)	(14,577		)
Balance, March 31, 2019	$	—	$	523	$	389,547		$	(88,949	)	$	(1,981	)	$	299,140		$	—		$	178,546		$	477,686
Net income (loss)	—		—		—			4,566			—			4,566			(320		)	1,580			5,826
Unrealized cash flow hedge losses	—		—		—			—			(2,547		)	(2,547		)	—			(912		)	(3,459		)
Realized cash flow hedge losses reclassified to net income	—		—		—			—			26			26			—			9			35
Net proceeds from issuance of cumulative redeemable perpetual preferred stock	63,250		—		(2,249		)	—			—			61,001			—			—			61,001
Net proceeds from issuance of common stock	—		4		7,494			—			—			7,498			—			—			7,498
Restricted stock awards, net of tax withholding	—		1		463			—			—			464			—			—			464
Noncontrolling interest in acquired real estate entity	—		—		—			—			—			—			4,870			—			4,870
Issuance of operating partnership units for acquisitions	—		—		(986		)	—			—			(986		)	—			69,061			68,075
Dividends and distributions declared ($0.21 per share and unit)	—		—		—			(11,107		)	—			(11,107		)	—			(4,447		)	(15,554		)
Balance, June 30, 2019	$	63,250	$	528	$	394,269		$	(95,490	)	$	(4,502	)	$	358,055		$	4,550		$	243,837		$	606,442
Dividends declared on preferred stock																										—		—		—			(1,067		)	—			(1,067		)	—			—			(1,067		)
Dividends and distributions declared on common shares and units ($0.22 per share and unit)																										—		—		—			(12,454		)	—			(12,454		)	—			(4,680		)	(17,134		)
Balance, March 31, 2020																										$	63,250	$	565	$	457,804		$	(115,390	)	$	(9,393	)	$	396,836		$	4,370		$	237,195		$	638,401

(1) The Company recorded cumulative effect adjustments related to the new Current Expected Credit Losses ("CECL") standard in the first quarter of 2020. See "Financial Statements — Note 2 — Significant Accounting Policies — Recent Accounting Pronouncements” for additional information.

Table of Contents



	Common stock		Additional paid-in capital			Distributions in excess of earnings			Accumulated other comprehensive loss			Total stockholders' equity			Noncontrolling interests in Operating Partnership			Total equity
Balance, December 31, 2018	$	500	$	357,353		$	(82,699	)	$	(1,283	)	$	273,871		$	182,019		$	455,890
Cumulative effect of accounting change ⁽²⁾	—		—			(125		)	—			(125		)	(42		)	(167		)
Net income	—		—			4,884			—			4,884			1,630			6,514
Unrealized cash flow hedge losses	—		—			—			(752		)	(752		)	(251		)	(1,003		)
Realized cash flow hedge losses reclassified to net income	—		—			—			54			54			18			72
Net proceeds from sales of common stock	21		30,185			—			—			30,206			—			30,206
Restricted stock awards, net of tax withholding	1		754			—			—			755			—			755
Restricted stock award forfeitures	—		(4		)	—			—			(4		)	—			(4		)
Redemption of operating partnership units	1		1,259			—			—			1,260			(1,260		)	—
Dividends and distributions declared on common shares and units ($0.21 per share and unit)	—		—			(11,009		)	—			(11,009		)	(3,568		)	(14,577		)
Balance, March 31, 2019	$	523	$	389,547		$	(88,949	)	$	(1,981	)	$	299,140		$	178,546		$	477,686

(2) The Company recorded cumulative effect adjustments related to the new lease standard in the first quarter of 2019. See "Financial Statements — Note 2 — Significant Accounting Policies — Recent Accounting Pronouncements” for additional information.

~~Table of Contents~~

Preferred stock Common stock Additional paid-in capital Distributions in excess of earnings Accumulated other comprehensive loss Total stockholders' equity Noncontrolling interests in investment entities Noncontrolling interests in Operating Partnership Total equity
Balance, December 31, 2017 $ —
$ 449
$ 287,407
$ (61,166 ) $ —
$ 226,690
$ —
$ 193,593
$ 420,283
Net income —
—
—
5,040
—
5,040
—
1,943
6,983
Restricted stock awards, net of tax withholding —
1
499
—
—
500
—
—
500
Restricted stock award forfeitures —
—
(4 ) —
—
(4 ) —
—
(4 )
Issuance of operating partnership units for acquisitions —
—
—
—
—
—
—
1,696
1,696
Redemption of operating partnership units —
2
1,797
—
—
1,799
—
(1,804 ) (5 )
Dividends and distributions declared ($0.20 per share and unit) —
—
—
(9,064 ) —
(9,064 ) —
(3,488 ) (12,552 )
Balance, March 31, 2018 $ —
$ 452
$ 289,699
$ (65,190 ) $ —
$ 224,961
$ —
$ 191,940
$ 416,901
Net income —
—
—
4,319
—
4,319
—
1,626
5,945
Net proceeds from issuance of common stock —
35
48,946
—
—
48,981
—
—
48,981
Restricted stock awards, net of tax withholding —
1
403
—
—
404
—
—
404
Issuance of operating partnership units for acquisitions —
—
(5 ) —
—
(5 ) —
505
500
Redemption of operating partnership units —
—
(466 ) —
—
(466 ) —
(2,060 ) (2,526 )
Dividends and distributions declared ($0.20 per share and unit) —
—
—
(9,777 ) —
(9,777 ) —
(3,458 ) (13,235 )
Balance, June 30, 2018 $ —
$ 488
$ 338,577
$ (70,648 ) $ —
$ 268,417
$ —
$ 188,553
$ 456,970

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)(Unaudited)


	Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2020			2019
OPERATING ACTIVITIES
Net income	$	12,340		$	12,928		$	9,135		$	6,514
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of buildings and tenant improvements	16,875			13,540			10,510			7,743
Amortization of leasing costs and in-place lease intangibles	6,507			4,917
Amortization of leasing costs, in-place lease intangibles and below market ground rents - operating leases							3,769			2,161
Accrued straight-line rental revenue	(2,208		)	(1,029		)	(557		)	(837		)
Amortization of leasing incentives and above or below-market rents	(97		)	(141		)	(219		)	(35		)
Amortization of right-of-use assets - finance leases							147			—
Accrued straight-line ground rent expense	56			136			(6		)	(3		)
Adjustment for uncollectable accounts	9			112
Provision for unrealized credit losses							377			—
Adjustment for uncollectable lease accounts							301			128
Noncash stock compensation	1,017			820			1,030			689
Impairment charges	—			98			158			—
Noncash interest expense	701			557			409			304
Annapolis Junction loan discount amortization ₍₁₎	(2,356		)	—
Interest expense on finance leases							229			—
Adjustment for Annapolis Junction loan discount amortization ⁽¹⁾							—			(1,118		)
Change in fair value of interest rate derivatives	3,396			(958		)	1,736			1,463
Equity in income of unconsolidated real estate entities	(273		)	—			—			(273		)
Changes in operating assets and liabilities:
Property assets	2,387			(2,505		)	1,196			2,591
Property liabilities	(2,841		)	(1,973		)	(4,151		)	(139		)
Construction assets	4,142			4,443			1,370			(502		)
Construction liabilities	(4,004		)	(15,081		)	2,097			579
Interest receivable	(7,539		)	(4,604		)	(7,224		)	(3,186		)
Net cash provided by operating activities	28,112			11,260			20,307			16,079
INVESTING ACTIVITIES
Development of real estate investments	(75,679		)	(57,741		)	(22,892		)	(41,296		)
Tenant and building improvements	(12,519		)	(5,599		)	(2,526		)	(3,629		)
Acquisitions of real estate investments, net of cash received	(133,345		)	(32,967		)	(8,607		)	(25,792		)
Dispositions of real estate investments, net of selling costs	1,014			4,271			1,442			—
Notes receivable issuances	(25,355		)	(5,816		)	(17,020		)	(9,668		)
Notes receivable paydowns	1,692			—			1,000			1,692
Leasing costs	(1,883		)	(2,060		)	(567		)	(575		)
Leasing incentives	—			(79		)
Contributions to equity method investments	(535		)	(3,127		)	—			(535		)
Net cash used for investing activities	(246,610		)	(103,118		)	(49,170		)	(79,803		)
FINANCING ACTIVITIES
Proceeds from issuance of cumulative redeemable perpetual preferred stock, net	61,001			—
Proceeds from issuance of common stock, net	37,704			48,981			1,349			30,206
Common shares tendered for tax withholding	(344		)	(343		)	(534		)	(344		)
Debt issuances, credit facility and construction loan borrowings	291,392			147,248			62,604			100,327
Debt and credit facility repayments, including principal amortization	(138,175		)	(84,277		)	(7,971		)	(57,690		)
Debt issuance costs	(3,167		)	(381		)	(3		)	(420		)
Redemption of operating partnership units	—			(2,531		)
Dividends on common stock and distributions on Operating Partnership units	(28,003		)	(24,337		)
Dividends and distributions							(17,373		)	(13,447		)
Net cash provided by financing activities	220,408			84,360			38,072			58,632
Net increase (decrease) in cash, cash equivalents, and restricted cash	1,910			(7,498		)	9,209			(5,092		)
Cash, cash equivalents, and restricted cash, beginning of period	24,051			22,916			43,579			24,051
Cash, cash equivalents, and restricted cash, end of period₍₂₎	$	25,961		$	15,418		$	52,788		$	18,959

See Notes to Condensed Consolidated Financial Statements.

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ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Cash Flows (Continued)

(In thousands)(Unaudited)

Six Months Ended
June 30,
2019 2018
Supplemental Disclosures (noncash transactions):
Increase in dividends and distributions payable $ 2,128
$ 1,450
(Decrease) increase in accrued capital improvements and development costs (9,861 ) 6,692
Issuance of operating partnership units for acquisitions 69,061
1,702
Operating Partnership units redeemed for common shares 1,260
1,804
Debt assumed at fair value in conjunction with real estate purchases 101,390
—
Note receivable extinguished in conjunction with real estate purchase 31,252
—
Equity method investment redeemed for real estate acquisition 23,011
—
Noncontrolling interest in acquired real estate entity 4,870
—
Recognition of operating lease ROU assets ₍₃₎
33,525
—
Recognition of operating lease liabilities ₍₃₎
41,191
—
Recognition of finance lease ROU assets 24,500
—
Recognition of finance lease liabilities 17,871
—



	Three Months Ended March 31,
	2020			2019
Supplemental Disclosures (noncash transactions):
Increase in dividends and distributions payable	$	828		$	1,130
(Decrease) increase in accrued capital improvements and development costs	(3,866		)	(7,609		)
Operating Partnership units redeemed for common shares	—			1,260
Equity method investment redeemed for real estate acquisition	—			23,011
Recognition of operating lease ROU assets	—			32,345
Recognition of operating lease liabilities	—			41,632

(1) Borrower paid $5.0 million in 2018 in exchange for the Company's purchase option. This ~~is being~~was accounted for as a loan modification fee; interest income ~~is being~~was recognized as additional interest income on the note receivable over the one-year ~~remaining~~then-remaining term. ~~See Note 7 for additional discussion.~~

(2) The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Statements of Cash Flows (in thousands):


	June 30, 2019		June 30, 2018		March 31, 2020		March 31, 2019
Cash and cash equivalents	$	23,109	$	12,279	$	48,096	$	15,577
Restricted cash _(a)	2,852		3,139		4,692		3,382
Cash, cash equivalents, and restricted cash	$	25,961	$	15,418	$	52,788	$	18,959

(a) Restricted cash represents amounts held by lenders for real estate taxes, insurance, and reserves for capital improvements.

~~(3) Net of $0.4 million disposal related to the Company's preexisting lease at the Thames Street Wharf property acquired on June 26, 2019.~~

See Notes to Condensed Consolidated Financial Statements.

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ARMADA HOFFLER PROPERTIES, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Business of Organization

Armada Hoffler Properties, Inc. (the "Company") is a ~~full service~~full-service real estate company with extensive experience developing, building, owning, and managing high-quality, institutional-grade office, retail, and multifamily properties in attractive markets primarily throughout the Mid-Atlantic and Southeastern United States.

The Company is a real estate investment trust ("REIT"), the sole general partner of Armada Hoffler, L.P. (the "Operating Partnership") and, as of ~~June 30, 2019,~~March 31, 2020, owned ~~71.4%~~72.6% of the economic interest in the Operating Partnership, of which 0.1% is held as general partnership units. The operations of the Company are carried on primarily through the Operating Partnership and the wholly owned subsidiaries of the Operating Partnership.

As of ~~June 30, 2019,~~March 31, 2020, the Company's property portfolio consisted of 5458 operating properties and 83 properties either under development or not yet stabilized.

Refer to Note 5 for information related to the Company's recent acquisitions and dispositions of operating properties.

2. Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles ("GAAP").

The condensed consolidated financial statements include the financial position and results of operations of the Company and its consolidated subsidiaries, including the Operating Partnership, its wholly-owned subsidiaries, and any interests in variable interest entities ("VIEs") where the Company has been determined to be the primary beneficiary. All significant intercompany transactions and balances have been eliminated in consolidation.

In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for the fair presentation of the financial condition and results of operations for the interim periods presented.

The accompanying condensed consolidated financial statements were prepared in accordance with the requirements for interim financial information. Accordingly, these interim financial statements have not been audited and exclude certain disclosures required for annual financial statements. Also, the operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire ~~year.~~year, particularly in light of the novel coronavirus ("COVID-19") pandemic and its effects on the domestic and global economies. The pandemic has led governments and other authorities around the world, including federal, state and local authorities in the United States, to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders, causing many of the Company’s tenants, particularly in the Company’s retail portfolio, to suspend or limit operations. We expect to continue to experience effects on our business as the impacts from COVID-19 and the related responses continue to develop. These interim financial statements should be read in conjunction with the audited consolidated financial statements of the Company included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed. Such estimates are based on management’s historical experience and best judgment after considering past, current, and expected events and economic conditions. Actual results could differ significantly from management’s estimates.

~~Recent Accounting Pronouncements~~

~~Leases~~

On February 25, 2016, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update ("ASU") that requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets (ASU 2016-02—~~Leases~~ ~~(Topic 842)). The new standard also makes targeted changes to lessor accounting. The Company adopted the new standard on January 1, 2019, using the modified retrospective approach for all leases~~

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~~existing at, or entered into after, the beginning of the earliest comparative period presented as permitted in Accounting Standards Codification ("ASC") Topic 842.~~Reclassifications

~~In addition,~~Certain items have been reclassified from their prior year classifications to conform to the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to not reassess whether any expired or existing contracts are or contain leases, not reassess the lease classification for any expired or existing leases, and not reassess initial direct costs for existing leases. As of January 1, 2019, Company did not have any leases classified as finance leases. The Company also elected a practical expedient that allowed it to not separate non-lease components from lease components and instead to account for each lease and non-lease component as a single lease component. The adoption of the new standard as of January 1, 2019 did not impact the Company's consolidated results of operations andcurrent year presentation. These reclassifications had no ~~impact~~effect on ~~cash flows.~~net income or stockholders' equity as previously reported.

As a lessee, the Company had six ground leases on five properties as of January 1, 2019 with initial terms that range from 20 to 65 years and options to extend up to an additional 70 years in certain cases. The exercise of lease renewal options is at the Company's sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term. The Company recognizes lease expense for operating leases on a straight-line basis over the lease term. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.Recent Accounting Pronouncements

The long-term ground leases represent a majority of the Company's current operating lease payments. The Company recorded right-of-use assets totaling $32.2 million and lease liabilities totaling $41.4 million upon adopting this standard on January 1, 2019. The Company utilized a weighted average discount rate of 5.4% to measure its lease liabilities upon adoption.

As a lessor, the Company leases its properties under operating leases and recognizes base rents on a straight-line basis over the lease term. The Company also recognizes revenue from tenant recoveries, through which tenants reimburse the Company on an accrual basis for certain expenses such as utilities, janitorial services, repairs and maintenance, security and alarms, parking lot and ground maintenance, administrative services, management fees, insurance, and real estate taxes. Rental revenues are reduced by the amount of any leasing incentives amortized on a straight-line basis over the term of the applicable lease. In addition, the Company recognizes contingent rental revenue (e.g., percentage rents based on tenant sales thresholds) when the sales thresholds are met. Many tenant leases include one or more options to renew, with renewal terms that can extend the lease term from one to 15 years or more. The exercise of lease renewal options is at the tenant's sole discretion. The Company includes a renewal periodAccounting Standards Adopted in ~~the lease term only if it appears at lease inception that the renewal is reasonably assured.~~

The new standard includes new considerations regarding the recognition of rental revenue when collection is not probable. The Company changed its presentation and measurement of charges for uncollectable lease revenue associated with its office, retail, and residential leasing activity, reflecting those amounts as a component of rental income on the accompanying Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2019. However, in accordance with its prospective adoption of the standard, the Company did not adjust the prior year period presentation of charges for uncollectable lease revenue associated with its office, retail, and residential leasing activity as a component of operating expenses, excluding property taxes, on the accompanying Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2018. Instead, the Company recorded a combined adjustment of $0.2 million to the opening balances for distributions in excess of earnings and noncontrolling interest relating to receivables where collection of substantially all operating lease payments was not probable as of January 1, 2019.

Lease-related receivables, which include contractual amounts accrued and unpaid from tenants and accrued straight-line rents receivable, are reduced for credit losses. Such amounts are recognized as a reduction to real estate rental revenues. The Company evaluates the collectability of lease receivables using several factors, including a lessee’s creditworthiness. The Company recognizes a credit loss on lease-related receivables when, in the opinion of management, collection of substantially all lease payments is not probable. When collectability is determined not probable, any lease income subsequent to recognizing the credit loss is limited to the lesser of the lease income reflected on a straight-line basis or cash collected.2020

Credit losses

In June 2016, the ~~FASB~~Financial Accounting Standard Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses - Measurement of Credit Losses on Financial Instruments (Topic 326). ASU 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance ~~will replace~~replaces the "incurred loss" approach under ~~existing~~previous guidance with an "expected loss" model for instruments measured at

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amortized cost, such as ~~our~~the Company's notes ~~receivable.~~receivable, construction receivables, and off-balance sheet credit exposures. The ~~guidance is effective for fiscal years beginning after December 15, 2019 and is~~amendment requires entities to ~~be adopted through~~consider a ~~cumulative-effect adjustment~~broader range of information to ~~retained earnings as of the beginning of the first reporting period in~~estimate expected credit losses, which ~~the guidance is effective. While the Company is currently evaluating the impact ASU 2016-13 will have on the consolidated financial statements, the Company expects that the adoption could~~may result in earlier recognition of losses.

The Company adopted the new standard on January 1, 2020, using the modified retrospective transition method and recorded a ~~provision~~noncash cumulative effect adjustment to record a reduction to retained earnings of $3.0 million, $2.8 million of which relates to the Company's mezzanine loans and $0.2 million of which relates to the Company's construction accounts receivable. See Note 6—Notes Receivable and Current Expected Credit Losses, for ~~loan losses~~more information.

Fair Value Measurements

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820). The ASU is part of the FASB's disclosure framework project to improve the effectiveness of disclosures in the notes to financial statements by facilitating clear communication of the information required by generally accepted accounting principles. The ASU modifies disclosure requirements on ~~its notes receivable.~~fair value measurements in Topic 820. The Company adopted the new standard on January 1, 2020. Adoption of the ASU did not have a material impact on disclosures in the Company's consolidated financial statements. See Note 12—Fair Value of Financial Instruments, for more information on the Company's presentation of the fair value of financial instruments.

Pending Accounting Guidance

Lease Modification Accounting Q&A

In April 2020, the FASB staff issued a question and answer document (the "Lease Modification Q&A") focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated within the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A allows lessors, if certain criteria have been met, to bypass the lease by lease analysis, and instead elect to either apply the lease modification accounting framework or not, with such election applied consistently to leases with similar characteristics and similar circumstances. The Company is evaluating the Lease Modification Q&A.

Other Accounting Policies

See the Company's Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 for a description of other accounting principles upon which basis the accompanying consolidated financial statements were prepared.

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3. Segments

Net operating income (segment revenues minus segment expenses) is the measure used by the Company’s chief operating decision-maker to assess segment performance. Net operating income is not a measure of operating income or cash flows from operating activities as measured by GAAP and is not indicative of cash available to fund cash needs. As a result, net operating income should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate net operating income in the same manner. The Company considers net operating income to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of the Company’s real estate and construction businesses.

Net operating income of the Company’s reportable segments for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018		Three Months Ended March 31,
	(Unaudited)								2020		2019
Office real estate
Rental revenues	$	7,382	$	5,288	$	12,938	$	10,388	$	10,192	$	5,556
Rental expenses	1,853		1,430		3,339		2,876		2,546		1,486
Real estate taxes	653		502		1,179		1,004		1,146		526
Segment net operating income	4,876		3,356		8,420		6,508		6,500		3,544
Retail real estate
Rental revenues	19,235		16,608		36,492		33,319		20,411		17,257
Rental expenses	2,893		2,563		5,493		5,220		3,020		2,600
Real estate taxes	1,893		1,656		3,704		3,339		2,166		1,811
Segment net operating income	14,449		12,389		27,295		24,760		15,225		12,846
Multifamily residential real estate
Rental revenues	9,761		6,702		17,857		13,590		11,686		8,096
Rental expenses	3,281		2,529		5,920		4,850		3,809		2,639
Real estate taxes	905		577		1,696		1,205		1,021		791
Segment net operating income	5,575		3,596		10,241		7,535		6,856		4,666
General contracting and real estate services
Segment revenues	21,444		20,654		38,480		43,704		47,268		17,036
Segment expenses	20,123		20,087		36,409		42,501		45,550		16,286
Segment gross profit	1,321		567		2,071		1,203		1,718		750
Net operating income	$	26,221	$	19,908	$	48,027	$	40,006	$	30,299	$	21,806

Rental expenses represent costs directly associated with the operation and management of the Company’s real estate properties. Rental expenses include asset management expenses, property management fees, repairs and maintenance, insurance, and utilities.

General contracting and real estate services revenues for the three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ exclude revenue related to intercompany construction contracts of ~~$30.0~~$13.1 million and ~~$34.2~~$30.2 million, ~~respectively.~~respectively, as it is eliminated in consolidation. General contracting and real estate services expenses for the three months ended March 31, 2020 and 2019 exclude expenses related to intercompany construction contracts of $13.0 million and $29.9 million, respectively.

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~~real estate services revenues for the six months ended June 30, 2019 and 2018 exclude revenue related to intercompany construction contracts of $60.2 million and $60.1 million, respectively.~~

General contracting and real estate services expenses for the three months ended June 30, 2019 and 2018 exclude expenses related to intercompany construction contracts of $29.7 million and $33.9 million, respectively. General contracting and real estate services expenses for the six months ended June 30, 2019 and 2018 exclude expenses related to intercompany construction contracts of $59.6 million and $59.5 million, respectively.

The following table reconciles net operating income to net income, the most directly comparable GAAP measure, for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			Three Months Ended March 31,
	(Unaudited)												2020			2019
Net operating income	$	26,221		$	19,908		$	48,027		$	40,006		$	30,299		$	21,806
Depreciation and amortization	(13,478		)	(9,179		)	(23,382		)	(18,457		)	(14,279		)	(9,904		)
Amortization of right-of-use assets - finance leases													(147		)	—
General and administrative expenses	(2,951		)	(2,764		)	(6,352		)	(5,725		)	(3,793		)	(3,401		)
Acquisition, development, and other pursuit costs	(57		)	(9		)	(457		)	(93		)
Acquisition, development and other pursuit costs													(27		)	(400		)
Impairment charges	—			(98		)	—			(98		)	(158		)	—
Interest income	5,593			2,375			10,912			4,607			7,226			5,319
Interest expense	(7,603		)	(4,497		)	(13,489		)	(8,870		)
Interest expense on indebtedness													(7,959		)	(5,886		)
Interest expense on finance leases													(229		)	—
Equity in income of unconsolidated real estate entities	—			—			273			—			—			273
Change in fair value of interest rate derivatives	(1,933		)	(11		)	(3,396		)	958			(1,736		)	(1,463		)
Other income	4			54			64			168
Provision for unrealized credit losses													(377		)	—
Other income (expense), net													58			60
Income tax benefit	30			166			140			432			257			110
Net income	$	5,826		$	5,945		$	12,340		$	12,928		$	9,135		$	6,514

General and administrative expenses represent costs not directly associated with the operation and management of the Company’s real estate properties and general contracting and real estate services businesses, including corporate office personnel salaries and benefits, bank fees, accounting fees, legal fees, and other corporate office expenses.

4. Leases

Lessee Disclosures

As a lessee, the Company has 8 ground leases on 7 properties with initial terms that range from 5 to 65 years and options to extend up to an additional 70 years in certain cases. The ~~components~~exercise of lease ~~cost~~renewal options is at the Company's sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term. NaN of these leases have been classified as operating leases and 2 of these leases have been classified as finance leases. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants. For more information about the Company's leases refer to the audited consolidated financial statements of the Company included in the Company’s Annual Report on Form 10-K for the ~~three~~year ended December 31, 2019.

Lessor Disclosures

As a lessor, the Company leases its properties under operating leases and ~~six months ended June 30, 2019 were~~recognizes base rents on a straight-line basis over the lease term. The Company also recognizes revenue from tenant recoveries, through which tenants reimburse the Company on an accrual basis for certain expenses such as ~~follows (in thousands):~~utilities, janitorial services, repairs and maintenance, security and alarms, parking lot and ground maintenance, administrative services, management fees, insurance, and real estate taxes. Rental revenues are reduced by the amount of any leasing incentives amortized on a straight-line basis over the term of the applicable lease. In addition, the Company recognizes contingent rental revenue (e.g., percentage rents based on tenant sales thresholds) when the sales thresholds are met. Many tenant leases include 1 or more options to renew, with renewal terms that can extend the lease term from one to 15 years or more. The exercise of lease renewal options is at the tenant's sole discretion. The Company includes a renewal period in the lease term only if it appears at lease inception that the renewal is reasonably assured.

Three Months Ended June 30, 2019 Six Months Ended
June 30, 2019
(Unaudited)
Operating lease cost $ 707
1,395
Finance lease cost:
Amortization of right-of-use assets $ 77
77
Interest on lease liabilities $ 112
112

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~~The table below presents supplemental cash flow information related to leases during the three and six months ended June 30, 2019 (in thousands):~~

Three Months Ended June 30, 2019 Six Months Ended
June 30, 2019
(Unaudited)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases $ 524
$ 1,024
Operating cash flows from finance leases 111
111
Financing cash flows from finance leases —
—

~~Additional information related to leases as of June 30, 2019 were as follows (in thousands):~~



	~~June 30, 2019~~
	~~(Unaudited)~~
~~Weighted Average Remaining Lease Term (years)~~
~~Operating leases~~	~~45.9~~
~~Finance leases~~	~~41.7~~

~~Weighted Average Discount Rate~~
~~Operating leases~~	~~5.4~~	%
~~Finance leases~~	~~5.2~~	%

~~Maturities of lease liabilities as of June 30, 2019 were as follows (in thousands):~~

Year Ending December 31, Operating Leases Finance Leases
2019 (excluding six months ended June 30, 2019) $ 954
$ 422
2020 2,080
864
2021 2,137
864
2022 2,361
868
2023 2,400
873
Thereafter 105,961
43,902
Total lease liabilities 115,893
47,793
Less imputed interest (74,593 ) (29,931 )
Present value of lease liabilities $ 41,300
$ 17,862

~~Lessor Disclosures~~

Rental revenue for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 comprised the following (in thousands):

Three Months Ended June 30, 2019 Six Months Ended
June 30, 2019
(Unaudited)
Base rent and tenant charges $ 35,066
$ 64,990
Accrued straight-line rental adjustment 1,187
2,148
Lease incentive amortization (184 ) (367 )
Above/below market lease amortization 309
516
Total rental revenue $ 36,378
$ 67,287

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~~The Company's commercial tenant leases provide for minimum rental payments during each of the next five years and thereafter as follows (in thousands):~~

Year Ending December 31, Operating Leases
2019 (excluding six months ended June 30, 2019) $ 48,504
2020 91,957
2021 84,332
2022 77,113
2023 67,302
Thereafter 314,422
Total $ 683,630



	Three Months Ended March 31,
	2020			2019
Base rent and tenant charges	$	41,513		$	29,925
Accrued straight-line rental adjustment	557			961
Lease incentive amortization	(173		)	(184		)
Above/below market lease amortization	392			207
Total rental revenue	$	42,289		$	30,909

5. Real Estate Investment

Property Acquisitions

On ~~February 6,~~January 10, 2020, the Company entered into an operating agreement with a partner to develop a mixed-use property in Charlotte, North Carolina. The Company has an 80% interest in 10^th and Tryon Partners, LLC (the "Tryon Partnership"). On January 10, 2020, the Tryon Partnership purchased land for a purchase price of $6.3 million for this project. The Company is responsible for funding the equity requirements of this development, including the $6.3 million purchase of the land. Management has concluded that this entity is a VIE as it lacks sufficient equity to fund its operations without additional financial support. The Company is the developer of the project and has the power to direct the activities of the project that most significantly impact its performance and is the party most closely associated with the project. Therefore, the Company is the project's primary beneficiary and consolidates the Tryon Partnership in its consolidated financial statements.

On September 12, 2019, the Company ~~acquired~~entered into an ~~additional outparcel phase of Wendover Village~~operating agreement with a partner to develop a mixed-use property in ~~Greensboro,~~Belmont, North ~~Carolina~~Carolina. The Company has an 85% interest in Chronicle Holdings, LLC (the "Chronicle Partnership"). On March 20, 2020, the Chronicle Partnership purchased land for a ~~contract~~purchase price of ~~$2.7~~$2.3 million ~~plus capitalized acquisition costs~~for this project. The Company is responsible for funding the equity requirements of ~~$0.1 million. This phase~~this development, including the $2.3 million purchase of the land. Management has concluded that this entity is ~~leased by~~ a ~~single tenant.~~

~~On March 14, 2019,~~VIE as it lacks sufficient equity to fund its operations without additional financial support. The Company is the developer of the project and has the power to direct the activities of the project that most significantly impact its performance and is the party most closely associated with the project. Therefore, the Company ~~acquired~~is the ~~office~~project's primary beneficiary and ~~retail portions of~~consolidates the ~~One City Center project~~Chronicle Partnership in ~~exchange for a redemption of~~ its 37% equity ownership in the joint venture with Austin Lawrence Partners, which totaled $23.0 million as of the acquisition date, and a cash payment of $23.2 million. The Company also incurred capitalized acquisition costs of $0.1 million.

On April 24, 2019, the Company exercised its option to purchase 79% of the interests in the partnership that owns 1405 Point in exchange for extinguishing the Company's $31.3 million note receivable on the project, making a cash payment of $0.3 million, and assuming a loan payable of $64.9 million, which was recorded at its fair value of $65.8 million. The Company also incurred capitalized acquisition costs of $0.1 million.

On May 23, 2019, the Company acquired Red Mill Commons and Marketplace at Hilltop from Venture Realty Group for consideration comprised of 4.1 million Class A Units (as defined in Note 11), the assumption of $35.7 million of mortgage debt principal, and $4.5 million in cash. The negotiated price was $105.0 million, which contemplated the price of the Company's common stock of $15.55 per share when the purchase and sale agreement was executed. The aggregate acquisition cost was $109.3 million, which consisted of 4.1 million Class A Units valued at $68.1 million (using the price of the Company's common stock of $16.50 on the date of the acquisition), mortgage debt valued at $35.6 million, cash consideration of $4.5 million, and capitalized acquisition costs of $1.1 million. In connection with the acquisition, the Company and the Operating Partnership entered into a tax protection agreement with the contributors pursuant to which the Company and the Operating Partnership agreed, subject to certain exceptions, to indemnify the contributors for up to 10 years against certain tax liabilities incurred by them, if such liabilities result from a transaction involving a direct or indirect taxable disposition of either or both of these properties or if the Operating Partnership fails to maintain and allocate to the contributors for taxation purposes minimum levels of Operating Partnership liabilities.

On June 26, 2019, the Company acquired Thames Street Wharf, a class A office building located in the Harbor Point development of Baltimore, Maryland, for $101.0 million in cash and $0.3 million of capitalized acquisition costs.

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The following table summarizes the purchase price allocation (including acquisition costs) based on relative fair value of the assets acquired and intangible liabilities assumed for the six operating properties purchased during the six months ended June 30, 2019 (in thousands):

Wendover Village additional outparcel One City Center 1405 Point Red Mill Commons Marketplace at Hilltop Thames Street Wharf
Land $ 1,633
$ 2,678
$ —
(a) $ 44,252
$ 2,023
(b) $ 15,861
Site improvements 50
163
298
2,558
691
150
Building and improvements 888
28,039
92,866
27,790
19,195
64,539
Furniture and fixtures —
—
2,302
—
—
—
In-place leases 101
15,140
3,371
9,973
4,565
24,385
Above-market leases 111
—
—
1,463
599
—
Below-market leases —
—
—
(6,221 ) (1,136 ) (3,636 )
Finance lease liabilities —
—
(8,671 ) —
(9,200 ) —
Finance lease right-of-use assets —
—
11,730
—
12,770
—
Net assets acquired $ 2,783
$ 46,020
$ 101,896
$ 79,815
$ 29,507
$ 101,299

~~(a) Land is subject to a ground lease.~~

~~(b) Portion of land is subject to a ground lease.~~consolidated financial statements.

Property Disposition

On ~~April 1, 2019, the Company sold Waynesboro Commons for a sale price of $1.1 million. There was no gain or loss recognized on the disposition.~~

~~Subsequent to June 30, 2019~~

~~On July 17, 2019,~~March 16, 2020, the Company executed an agreement to sell ~~Lightfoot Marketplace~~a portfolio of 7 retail properties for ~~$30.3 million~~$106.5 million. The portfolio consists of Alexander Pointe, Bermuda Crossroads, Gainsborough Square, Harper Hill Commons, Indian Lakes Crossing, Renaissance Square, and ~~classified the property as held for sale at that time.~~

~~6. Equity Method Investment~~

~~One City Center~~

On February 25, 2016, the Company acquired a 37% interest in One City Center, a joint venture with Austin Lawrence Partners, for purposes of developing a 22-story mixed use tower in Durham, North Carolina. During the six months ended June 30, 2019, the Company invested an additional $0.5 million in One City Center.

For the period from January 1, 2019 to March 13, 2019, One City Center had operating income of $0.3 million allocated to the Company. For the three and six months ended June 30, 2018, One City Center had no operating activity, and therefore the Company received no allocated income.

On March 14, 2019, the Company acquired the office and retail portions of the One City Center project in exchange for its 37% equity ownership in the joint venture and a cash payment of $23.2 million. See Note 5 for additional discussion.Stone House Square properties. This agreement was terminated on April 8, 2020.

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7. 6. Notes Receivable and Current Expected Credit Losses

Notes Receivable

The Company had the following notes receivable outstanding as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 ($ in thousands):



	Outstanding loan amount										Interest compounding
Development Project	March 31, 2020			December 31, 2019		Maximum loan commitment		Interest rate			Interest compounding
The Residences at Annapolis Junction	$	42,517		$	40,049	$	48,105	10.0	%		Monthly
Delray Plaza	15,484			12,995		17,000		15.0	%	^(a)	Annually
Nexton Square	15,904			15,097		17,000		10.0	%		Monthly
Interlock Commercial	75,846			59,224		95,000		15.0	%		None
Solis Apartments at Interlock	26,425			25,588		41,100		13.0	%		Annually
Total mezzanine	176,176			152,953		$	218,205
Other notes receivable	1,167			1,147
Notes receivable guarantee premium	4,511			5,271
Allowance for credit losses	(3,202		)	—
Total notes receivable	$	178,652		$	159,371

Outstanding loan amount Maximum loan commitment Interest rate Interest compounding
Development Project June 30,
2019 December 31, 2018
1405 Point $ —
$ 30,238
$ 31,032
8.0 % Monthly
The Residences at Annapolis Junction 37,602
36,361
48,105
10.0 % Monthly
North Decatur Square ^(a)
19,852
18,521
29,673
15.0 % Annually
Delray Plaza 12,098
7,032
15,000
15.0 % Annually
Nexton Square 14,168
14,855
17,000
15.0 % Monthly
Interlock Commercial 38,062
18,269
95,000
15.0 % None
Solis Apartments at Interlock 17,226
13,821
41,100
13.0 % Annually
Total mezzanine 139,008
139,097
$ 276,910

Other notes receivable 1,314
1,275

Notes receivable guarantee premium 6,554
2,800

Notes receivable discount, net ^(b)
(2,133 ) (4,489 )
Total notes receivable $ 144,743
$ 138,683

(a) ~~This~~$2.0 million of this loan ~~was paid in full on July 22, 2019.~~

~~(b) Represents the remaining unamortized portion~~is subject to an interest rate of ~~the $5.0 million loan modification fee for The Residences at Annapolis Junction paid by the borrower in November 2018.~~6%.

Interest on the mezzanine loans is accrued and funded utilizing the interest reserves for each loan, which are components of the respective maximum loan commitments, and such accrued interest is added to the loan receivable balances. The Company recognized interest income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ as follows (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
Development Project	2019			2018		2019			2018		2020			2019
1405 Point	$	173		$	483	$	783		$	936	$	—		$	610
The Residences at Annapolis Junction	2,173		(a)	1,124		4,196		(a)	2,209		2,468		^(a)	2,024		^(b)
North Decatur Square	693			531		1,331			992		—			638
Delray Plaza	414			225		724			448		489			310
Nexton Square	524			—		1,033			—		391			510
Interlock Commercial	1,086			—		1,830			—		3,017		^(a)	743
Solis Apartments at Interlock	508			—		972			—		838			463
Total mezzanine	5,571			2,363		10,869			4,585		7,203			5,298
Other interest income	22			12		43			22		23			21
Total interest income	$	5,593		$	2,375	$	10,912		$	4,607	$	7,226		$	5,319

(a) Includes partial recognition of interest income related to an exit fee that is due upon repayment of the loan.

(b) Includes amortization of the $5.0 million loan modification fee paid by the borrower in November 2018.

Delray Plaza

On March 3, 2020, the Delray Plaza loan was modified to increase the maximum amount of the loan to $17.0 million, with $2.0 million of additional funds borrowed at an interest rate of 6% in order to fund final development activities. The borrower pledged 125,832 Class A Units as additional collateral for this loan.

Current Expected Credit Losses

The Company is exposed to credit losses primarily through its mezzanine lending activities. As of ~~June 30, 2019~~March 31, 2020, the Company had 5 mezzanine loans, all of which are secured by second liens on development projects in various stages of

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completion or lease-up. Each of these projects is subject to a loan that is senior to the Company’s mezzanine loan. Interest on these loans is paid in kind and ~~December 31, 2018, there was no allowance for loan losses. During the three and six months ended June 30, 2019 and 2018, there was no provision for loan losses recorded for any~~is generally not expected to be paid until a sale of the ~~Company's notes receivable.~~ project after completion of the development.

The Company's management performs a quarterly analysis of the loan portfolio to determine ~~if an impairment has occurred~~the risk of credit loss based on the progress of development activities including leasing activities, projected development costs, and current and projected mezzanine and senior construction loan balances. The Company estimates future losses on its notes receivable using risk ratings that correspond to probabilities of default and loss given default. The Company's risk ratings are as follows:

~~Delray Plaza~~Pass: loans in this category are adequately collateralized by a development project with conditions materially consistent with the Company's underwriting assumptions.

Special Mention: loans in this category show signs that the economic performance of the project may suffer as a result of slower-than-expected leasing activity or an extended development or marketing timeline. Loans in this category warrant increased monitoring by management.

Substandard: loans in this category may not be fully collected by the Company unless remediation actions are taken. Remediation actions may include obtaining additional collateral or assisting the borrower with asset management activities to prepare the project for sale. The Company may also consider placing the loan on non-accrual status if it does not believe that additional interest accruals will ultimately be collected.

On ~~January 8, 2019,~~a quarterly basis, the ~~Delray Plaza~~Company compares the risk inherent in its loans to industry loan ~~was modified~~loss data experienced during past business cycles. The Company updated the risk ratings for each of its notes receivable during the three months ended March 31, 2020. The Company obtained industry loan loss data relative to ~~increase the maximum amount~~these risk ratings as of December 31, 2019.

The following table presents amortized cost basis of the ~~loan to $15.0 million~~portfolio by year of origination and risk rating as of March 31, 2020 (in thousands):



	Year of Origination
Risk Ratings	2020		2019		2018		2017		2016		Total
Pass	$	—	$	—	$	120,495	$	—	$	—	$	120,495
Special Mention	—		—		—		—		—		—
Substandard	—		—		—		14,839		42,150		56,989
Total amortized cost basis	$	—	$	—	$	120,495	$	14,839	$	42,150	$	177,484

As of December 31, 2019, there was 0 allowance for loan losses. At March 31, 2020, the Company reported $178.7 million of notes receivable, net of allowances of $3.2 million. Changes in the allowance for the three months ended March 31, 2020 were as follows (in thousands):



	Three Months Ended March 31, 2020
Beginning balance (December 31, 2019)	$	—
Cumulative effect of accounting change	2,825
Provision for unrealized credit losses	377
Ending balance	$	3,202

The Company places loans on non-accrual status when the loan balance, together with the balance of any senior loan, approximately equal the estimated realizable value of the underlying development project. As of March 31, 2020 and December 31, 2019, there were no loans on non-accrual status. Effective April 1, 2020, the Company placed the loans for Delray Plaza and The Residences at Annapolis Junction on non-accrual status.

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~~increase the payment guarantee amount to $5.2 million.~~

~~Nexton Square~~

On February 8, 2019, the developer of Nexton Square closed on a senior construction loan with a maximum borrowing capacity of $25.2 million. The developer used proceeds from its original draw in part to repay $2.1 million of the mezzanine loan. Upon the closing of this senior construction loan, the Company entered into a payment guarantee for $12.6 million of the senior loan.

~~1405 Point~~

On April 24, 2019, the Company exercised its option to purchase 79% of the interests in the partnership that owns 1405 Point in exchange for extinguishing its note receivable on the project and a cash payment of $0.3 million. The project is subject to a loan payable of $64.9 million. The Company has also guaranteed payment on a portion of the loan payable. See Note 15 for additional information.

~~Interlock Commercial~~

~~On April 19, 2019, the borrower executed its senior construction loan, and the Company's payment guarantee of up to $30.7 million became effective. See Note 15 for additional information.~~

~~Annapolis Junction~~

The Annapolis Junction loan was originated inclusive of options for the Company to purchase up to 88% of the related development project from the developer, Annapolis Junction Apartments Owner, LLC (“AJAO”). On November 16, 2018, AJAO refinanced the senior construction loan with a one year senior loan of $83.0 million. This senior loan may be extended for one additional year if certain minimum debt yields and minimum debt service coverage ratios are met by AJAO. Concurrent with the refinancing of the senior construction loan, the Company agreed to modify the mezzanine loan receivable with AJAO as follows:

•~~The Company agreed to guarantee $8.3 million of the new senior loan;~~

•~~The Company agreed to extend the maturity of the mezzanine loan, which will mature concurrently with the new senior loan;~~

•~~The Company terminated its rights under the purchase options;~~

•~~AJAO paid a fee of $5.0 million; and~~

•~~AJAO paid down $11.1 million of the outstanding mezzanine loan balance, which was comprised of a $9.9 million payment of accrued interest and a $1.2 million payment of principal.~~

~~The fee of $5.0 million paid by AJAO is being accounted for as a loan discount that is being recognized as interest income over the remaining term of the loan using the effective interest method.~~

~~Subsequent to June 30, 2019~~

~~On July 22, 2019, the borrower paid off the North Decatur Square note receivable in full. The Company received the outstanding principal and interest in the amount of $20.0 million.~~

8.7. Construction Contracts

Construction contract costs and estimated earnings in excess of billings represent reimbursable costs and amounts earned under contracts in progress as of the balance sheet date. Such amounts become billable according to contract terms, which usually consider the passage of time, achievement of certain milestones, or completion of the project. The Company expects to bill and collect substantially all construction contract costs and estimated earnings in excess of billings as of ~~June 30, 2019~~March 31, 2020 during the next twelve months.

Billings in excess of construction contract costs and estimated earnings represent billings or collections on contracts made in advance of revenue recognized.

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The following table summarizes the changes to the balances in the Company’s construction contract costs and estimated earnings in excess of billings account and the billings in excess of construction contract costs and estimated earnings account for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in thousands):


	Six Months Ended June 30, 2019						Six Months Ended June 30, 2018						Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
	Construction contract costs and estimated earnings in excess of billings			Billings in excess of construction contract costs and estimated earnings			Construction contract costs and estimated earnings in excess of billings			Billings in excess of construction contract costs and estimated earnings			Construction contract costs and estimated earnings in excess of billings			Billings in excess of construction contract costs and estimated earnings			Construction contract costs and estimated earnings in excess of billings			Billings in excess of construction contract costs and estimated earnings
Beginning balance	$	1,358		$	3,037		$	245		$	3,591		$	249		$	5,306		$	1,358		$	3,037
Revenue recognized that was included in the balance at the beginning of the period	—			(3,037		)	—			(3,591		)	—			(5,306		)	—			(3,037		)
Increases due to new billings, excluding amounts recognized as revenue during the period	—			2,541			—			1,898			—			6,311			—			3,859
Transferred to receivables	(1,890		)	—			(245		)	—			(285		)	—			(1,358		)	—
Construction contract costs and estimated earnings not billed during the period	461			—			1,287			—			458			—			17			—
Changes due to cumulative catch-up adjustment arising from changes in the estimate of the stage of completion	532			(752		)	—			(187		)	36			—			300			(237		)
Ending balance	$	461		$	1,789		$	1,287		$	1,711		$	458		$	6,311		$	317		$	3,622

The Company defers pre-contract costs when such costs are directly associated with specific anticipated contracts and their recovery is probable. Pre-contract costs of ~~$0.7~~$1.5 million and ~~$1.4~~$0.9 million were deferred as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. Amortization of pre-contract costs for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ was ~~$0.3~~$0.2 million and ~~zero,~~less than $0.1 million, respectively.

Construction receivables and payables include retentions, amounts that are generally withheld until the completion of the contract or the satisfaction of certain restrictive conditions such as fulfillment guarantees. As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, construction receivables included retentions of ~~$3.2~~$10.9 million and ~~$8.5~~$9.0 million, respectively. The Company expects to collect substantially all construction receivables outstanding as of ~~June 30, 2019~~March 31, 2020 during the next twelve months. As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, construction payables included retentions of ~~$14.7~~$16.0 million and ~~$21.6~~$18.0 million, respectively. The Company expects to pay substantially all construction payables outstanding as of ~~June 30, 2019~~March 31, 2020 during the next twelve months.

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The Company’s net position on uncompleted construction contracts comprised the following as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 (in thousands):

June 30, 2019 December 31, 2018
Costs incurred on uncompleted construction contracts $ 630,425
$ 594,006
Estimated earnings 22,383
20,375
Billings (654,136 ) (616,060 )
Net position $ (1,328 ) $ (1,679 )

Construction contract costs and estimated earnings in excess of billings $ 461
$ 1,358
Billings in excess of construction contract costs and estimated earnings (1,789 ) (3,037 )
Net position $ (1,328 ) $ (1,679 )

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	March 31, 2020			December 31, 2019
Costs incurred on uncompleted construction contracts	$	741,116		$	695,564
Estimated earnings	26,240			24,553
Billings	(773,209		)	(725,174		)
Net position	$	(5,853	)	$	(5,057	)

Construction contract costs and estimated earnings in excess of billings	$	458		$	249
Billings in excess of construction contract costs and estimated earnings	(6,311		)	(5,306		)
Net position	$	(5,853	)	$	(5,057	)

The Company’s balances and changes in construction contract price allocated to unsatisfied performance obligations (backlog) as of ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Beginning backlog	$	160,871		$	30,733		$	165,863		$	49,167		$	242,622		$	165,863
New contracts/change orders	39,177			27,807			51,196			32,376			40,440			12,019
Work performed	(21,416		)	(20,619		)	(38,427		)	(43,622		)	(47,420		)	(17,011		)
Ending backlog	$	178,632		$	37,921		$	178,632		$	37,921		$	235,642		$	160,871

The Company expects to complete a majority of the uncompleted contracts in place as of ~~June 30, 2019~~March 31, 2020 during the next 12 to 18 months.

9.8. Indebtedness

Credit Facility

The Company has a senior credit facility that was ~~modified~~amended and restated on ~~January 31,~~October 3, 2019, ~~using the accordion feature to increase the maximum total commitments to $355.0~~which provides for a

$355.0 million credit facility comprised of a $150.0 million senior unsecured revolving credit facility (the "revolving credit facility") and a $205.0 million senior unsecured term loan facility (the "term loan facility" and, together with the revolving credit facility, the "credit facility"), with a syndicate of banks.

The credit facility includes an accordion feature that allows the total commitments to be further increased to ~~$450.0~~$700.0 million, subject to certain conditions, including obtaining commitments from any one or more lenders. The revolving credit facility has a scheduled maturity date of ~~October 26, 2021,~~January 24, 2024, with ~~two~~2 six-month extension options, subject to certain conditions, including payment of a 0.075% extension fee at each extension. The term loan facility has a scheduled maturity date of ~~October 26, 2022.~~January 24, 2025.

The revolving credit facility bears interest at LIBOR (the London Inter-Bank Offered Rate) plus a margin ranging from ~~1.40%~~1.30% to ~~2.00%~~1.85% and the term loan facility bears interest at LIBOR plus a margin ranging from ~~1.35%~~1.25% to ~~1.95%~~1.80%, in each case depending on the Company's total leverage. The Company is also obligated to pay an unused commitment fee of 15 or 25 basis points on the unused portions of the commitments under the revolving credit facility, depending on the amount of borrowings under the credit facility.

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the outstanding balance on the revolving credit facility was ~~$122.0~~$150.0 million and ~~$126.0~~$110.0 million, respectively, and the outstanding balance on the term loan facility was $205.0 million ~~and $180.0 million, respectively.~~on each of those dates. As of ~~June 30, 2019,~~March 31, 2020, 0 borrowing capacity was available under the credit facility. As of March 31, 2020, the effective interest rates on the revolving credit facility and the term loan facility were ~~3.95%~~2.49% and ~~3.90%~~2.44%, respectively. The Company may, at any time, voluntarily prepay any loan under the credit facility in whole or in part without premium or penalty.

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The Operating Partnership is the borrower under the credit facility, and its obligations under the credit facility are guaranteed by the Company and certain of its subsidiaries that are not otherwise prohibited from providing such guaranty. The credit agreement contains customary representations and warranties and financial and other affirmative and negative covenants. The Company's ability to borrow under the credit facility is subject to ongoing compliance with a number of financial covenants, affirmative covenants, and other restrictions. The credit agreement includes customary events of default, in certain cases subject to customary cure periods. The occurrence of an event of default, if not cured within the applicable cure period, would permit the lenders to, among other things, declare the unpaid principal, accrued and unpaid interest, and all other amounts payable under the credit facility to be immediately due and payable.

The Company is currently in compliance with all covenants ~~under~~governing the credit ~~agreement.~~facility.

Other ~~2019~~2020 Financing Activity

~~On January 31, 2019, the Company paid off North Point Center Note 1.~~

~~On March 11, 2019, the Company received $7.4 million of additional funding on the loan secured by Lightfoot Marketplace.~~

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On March 14, 2019, the Company obtained a loan secured by One City Center in the amount of $25.6 million in conjunction with the acquisition of this property. This loan may be increased to $27.6 million subject to certain conditions.

~~The loan bears interest at a rate of LIBOR plus a spread of 1.85% and will mature on April 1, 2024.~~

On April 24, 2019, the Company exercised its option to purchase 79% of the partnership that owns 1405 Point in exchange for extinguishing its note receivable on the project and a cash payment of $0.3 million. The project was acquired subject to a loan payable of $64.9 million, which was recorded at its fair value of $65.8 million. The loan matures on May 1, 2020 and bears interest at a rate of LIBOR plus a spread of 2.75%; this spread will decrease to 2.50% upon stabilization (as defined in the loan agreement).

~~On May 23, 2019, the Company assumed notes payable in connection with the acquisition of Red Mill Commons and Marketplace at Hilltop with outstanding principal balances of $24.9 million and~~ ~~$10.8 million, respectively. The following table summarizes the note balance at assumption, fair value at assumption, maturity date, and interest rate for each loan ($ in thousands):~~

Loan name Note balance at assumption Fair value of loan at assumption Loan maturity date Loan interest rate
Redmill North $ 4,451
$ 4,520
12/31/2028 4.73 %
Redmill South 6,310
6,090
5/1/2025 3.57 %
Redmill Central 2,640
2,690
6/17/2024 4.80 %
Redmill West 11,548
11,540
6/1/2022 4.23 %
Marketplace at Hilltop 10,740
10,790
10/1/2022 4.42 %
$ 35,689
$ 35,630

On June 26, 2019, the Company obtained a loan secured by Thames Street Wharf in the amount of $70.0 million in conjunction with the acquisition of this property. The loan bears interest at a rate of LIBOR plus a spread of 1.30% and will mature on June 26, 2022.

On June 26, 2019, the Company entered into a $76.0 million syndicated construction loan facility for the Wills Wharf development project in Baltimore, Maryland. The facility bears interest at a rate of LIBOR plus a spread of 2.25% during construction activities and will mature on June 26, 2023. The facility will have an unused commitment fee of 25 basis points until the Company has borrowed at least $19.0 million under the facility.

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, the Company borrowed ~~$50.3~~$18.9 million under its existing construction loans to fund new development and construction.

~~Subsequent to June 30, 2019~~

~~In July 2019, the Company borrowed $5.4 million on its construction loans to fund development activities.~~

~~10.~~9. Derivative Financial Instruments

The Company ~~may enter~~enters into interest rate derivative contracts to manage exposure to interest rate risks. The Company does not use derivative financial instruments for trading or speculative purposes. Derivative financial instruments are recognized at fair value and presented within other assets and other liabilities in the condensed consolidated balance sheets. Gains and losses resulting from changes in the fair value of derivatives that are neither designated nor qualify as hedging instruments are recognized within the change in fair value of interest rate derivatives in the condensed consolidated statements of comprehensive income. For derivatives that qualify as cash flow hedges, the gain or loss is reported as a component of other comprehensive income (loss) and reclassified into earnings in the periods during which the hedged forecasted transaction affects earnings.

As of March 31, 2020, the Company had the following LIBOR interest rate caps ($ in thousands):



Origination Date	Expiration Date	Notional Amount			Strike Rate		Premium Paid
3/7/2018	4/1/2020	$	50,000		2.25	%	$	310
7/16/2018	8/1/2020	50,000			2.50	%	319
12/11/2018	1/1/2021	50,000			2.75	%	210
5/15/2019	6/1/2022	100,000			2.50	%	288
1/10/2020	2/1/2022	50,000		^(a)	1.75	%	87
1/28/2020	2/1/2022	50,000		^(a)	1.75	%	62
2/28/2020	3/1/2022	100,000		^(a)	1.50	%	111
Total		$	450,000				$	1,387

(a) Designated as a cash flow hedge.

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As of ~~June 30, 2019, the Company had the following LIBOR interest rate caps ($ in thousands), which are not designated as cash flow hedges for accounting purposes:~~

Origination Date Expiration Date Notional Amount Strike Rate Premium Paid
6/23/2017 7/1/2019 $ 50,000
1.50 % $ 154
9/18/2017 10/1/2019 50,000
1.50 % 199
11/28/2017 12/1/2019 50,000
1.50 % 359
3/7/2018 4/1/2020 50,000
2.25 % 310
7/16/2018 8/1/2020 50,000
2.50 % 319
12/11/2018 1/1/2021 50,000
2.75 % 210
5/15/2019 6/1/2022 100,000
2.50 % 288
Total $ 400,000
$ 1,839

~~As of June 30, 2019,~~March 31, 2020, the Company held the following floating-to-fixed interest rate swaps ($ in thousands):


Related Debt	Notional Amount			Index	Swap Fixed Rate		Debt effective rate		Effective Date	Expiration Date	Notional Amount			Index	Swap Fixed Rate		Debt effective rate		Effective Date	Expiration Date
Senior unsecured term loan	$	50,000		1-month LIBOR	2.00	%	3.50	%	3/1/2016	2/20/2020	$	50,000		1-month LIBOR	2.78	%	4.23	%	5/1/2018	5/1/2023
John Hopkins Village											51,566		^(a)	1-month LIBOR	2.94	%	4.19	%	8/7/2018	8/7/2025
Senior unsecured term loan	50,000			1-month LIBOR	2.78	%	4.28	%	5/1/2018	5/1/2023	10,500		^(a)	1-month LIBOR	3.02	%	4.47	%	10/12/2018	10/12/2023
John Hopkins Village	52,256		(a)	1-month LIBOR	2.94	%	4.19	%	8/7/2018	8/7/2025
Lightfoot Marketplace	10,500		(a)	1-month LIBOR	3.02	%	4.77	%	10/12/2018	10/12/2023
249 Central Park Retail, South Retail, and Fountain Plaza Retail	34,570		(a)	1-month LIBOR	2.25	%	3.85	%	4/1/2019	8/10/2023	34,228		^(a)	1-month LIBOR	2.25	%	3.85	%	4/1/2019	8/10/2023
Senior unsecured term loan	50,000		(a)	1-month LIBOR	2.26	%	3.76	%	4/1/2019	10/22/2022	50,000		^(a)	1-month LIBOR	2.26	%	3.71	%	4/1/2019	10/26/2022
Thames Street Wharf											70,000		^(a)	1-month LIBOR	0.51	%	1.81	%	3/26/2020	6/26/2024
Senior unsecured term loan											25,000		^(a)	1-month LIBOR	0.50	%	1.95	%	4/1/2020	4/1/2024
Senior unsecured term loan											25,000		^(a)	1-month LIBOR	0.50	%	1.95	%	4/1/2020	4/1/2024
Senior unsecured term loan											25,000		^(a)	1-month LIBOR	0.55	%	2.00	%	4/1/2020	4/1/2024
Total	$	247,326									$	341,294

(a) Designated as a cash flow hedge.

For ~~those~~the interest rate swaps designated as cash flow hedges, ~~during the three months ended June 30, 2019, unrealized losses of $3.5 million were recorded to other comprehensive loss, and less than $0.1 million of~~ realized losses ~~were~~are reclassified out of accumulated other comprehensive loss to interest expense ~~due to payments made to~~in the ~~swap counterparty during the three months ended June 30, 2019. For the interest rate swaps designated as cash flow hedges, during the six months ended June 30, 2019, unrealized losses~~Condensed Consolidated Statements of ~~$4.5 million were recorded to other comprehensive loss, and $0.1 million of realized losses were reclassified out of accumulated other comprehensive loss to interest expense~~Comprehensive Income due to payments made to the swap counterparty. During the next 12 months, the Company anticipates reclassifying approximately ~~$1.1~~$3.7 million of net hedging losses from accumulated other comprehensive loss into earnings to offset the variability of the hedged items during this period.

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The Company’s derivatives were comprised of the following as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 (in thousands):


	June 30, 2019							December 31, 2018							March 31, 2020							December 31, 2019
	(Unaudited)														(Unaudited)
	Notional Amount		Fair Value					Notional Amount		Fair Value					Notional Amount		Fair Value					Notional Amount		Fair Value
			Asset		Liability					Asset		Liability					Asset		Liability					Asset		Liability
Derivatives not designated as accounting hedges
Interest rate swaps	$	100,000	$	—	$	(2,186	)	$	100,000	$	303	$	(749	)	$	50,000	$	—	$	(3,755	)	$	100,000	$	—	$	(1,992	)
Interest rate caps	400,000		422		—			350,000		1,790		—			250,000		52		—			250,000		25		—
Total derivatives not designated as accounting hedges	500,000		422		(2,186		)	450,000		2,093		(749		)	300,000		52		(3,755		)	350,000		25		(1,992		)
Derivatives designated as accounting hedges
Interest rate swaps	147,326		—		(6,080		)	63,208		—		(1,725		)	291,294		—		(12,676		)	146,642		—		(5,728		)
Interest rate caps															200,000		91		—
Total derivatives	$	647,326	$	422	$	(8,266	)	$	513,208	$	2,093	$	(2,474	)	$	791,294	$	143	$	(16,431	)	$	496,642	$	25	$	(7,720	)

The changes in the fair value of the Company’s derivatives during the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were comprised of the following (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,					Three Months Ended March 31,
	2019			2018			2019			2018		2020			2019
Interest rate swaps	$	(4,549	)	$	5		$	(6,201	)	$	353	$	(9,084	)	$	(1,652	)
Interest rate caps	(843		)	(16		)	(1,657		)	605		(141		)	(814		)
Total change in fair value of interest rate derivatives	$	(5,392	)	$	(11	)	$	(7,858	)	$	958	$	(9,225	)	$	(2,466	)
Comprehensive income statement presentation:
Change in fair value of interest rate derivatives	$	(1,933	)	$	(11	)	$	(3,396	)	$	958	$	(1,736	)	$	(1,463	)
Unrealized cash flow hedge gains losses	(3,459		)	—			$	(4,462	)	$	—	(7,489		)	(1,003		)
Total change in fair value of interest rate derivatives	$	(5,392	)	$	(11	)	$	(7,858	)	$	958	$	(9,225	)	$	(2,466	)

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~~11.~~10. Equity

Stockholders’ Equity

On February 26, 2018, the Company commenced an at-the-market continuous equity offering program (the "Prior ATM Program"), which was amended on August 6, 2019, through which the Company could, from time to time, issue and sell shares of its common stock having an aggregate offering price of up to $180.7 million. During the three months ended March 31, 2020, the Company issued and sold 92,577 shares of common stock at a weighted average price of $18.23 per share under the Prior ATM Program, receiving net proceeds after offering costs and commissions of $1.7 million.

On March 10, 2020, the Company commenced a new at-the-market continuous equity offering program (the "ATM Program") through which the Company may, from time to time, issue and sell shares of its common stock having an aggregate offering price of up to $125.0 million. During the six months ended June 30, 2019, the Company sold an aggregate of 2,522,186 shares of common stock at a weighted average price of $15.16 per share under the ATM Program, receiving net proceeds, after offering costs and ~~commissions, of $37.8 million.~~

~~On June 18, 2019, the Company issued 2,530,000~~ shares of its 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock ~~$0.01 par value per share ("Series~~(the "Series A Preferred Stock"), having an aggregate offering price of up to $300.0 million, to or through its sales agents and, with ~~a liquidation preference~~respect to shares of ~~$25.00 per share, which included 330,000 shares issued upon~~its common stock, may enter into separate forward sales agreements to or through the ~~underwriters’ full exercise of their option to purchase additional shares. Net proceeds from~~forward purchaser. Upon commencing the ~~offering, after the underwriting discount but before offering expenses payable by~~ATM Program, the Company ~~were approximately $61.3 million. The~~simultaneously terminated the Prior ATM Program. During the three months ended March 31, 2020, the Company ~~used the net proceeds to fund a portion of the purchase~~did not issue any shares under this ATM Program. Shares having an aggregate offering price of Thames Street Wharf, a 263,426 square foot office building located in the Harbor Point neighborhood of Baltimore, Maryland. The balance of the net proceeds was used to repay a portion of the outstanding borrowings$300.0 million remained unsold under the ~~Company’s unsecured revolving credit facility and for general corporate purposes.~~ATM Program as of May 5, 2020.

In connection with the ~~issuance~~ATM Program, on March 6, 2020, the Company filed, with the State Department of Assessments and Taxation of the State of Maryland ("MSDAT"), Articles Supplementary (the "Articles Supplementary") to the Articles of Amendment and Restatement of the Company, designating 400,000 shares of the Company’s authorized preferred stock as shares of Series A Preferred Stock, on June 18, 2019, the Operating Partnership issued to the Company 2,530,000 6.75% Series A Cumulative Redeemable Perpetual Preferred Units (the "Series A Preferred Units"), which have economic terms that are identical to the Company’sresulting in a total of 2,930,000 shares classified as Series A Preferred Stock. The ~~Series A Preferred Units were issued in exchange for the Company’s contribution of the net proceeds from the offering of the Series A Preferred Stock to the Operating Partnership.~~

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Dividends on the Series A Preferred Stock will be payable quarterly in arrears on or about the 15th day of each January, April, July and October. The first dividend on the Series A Preferred Stock will be paid on October 15, 2019 and will include $0.0609 per share that was accumulated and unpaid as of June 30, 2019. The Series A Preferred Stock does not have a stated maturity date and is not subject to any sinking fund or mandatory redemption provisions. Upon liquidation, dissolution or winding up, the Series A Preferred Stock will rank senior to the Company's common stockArticles Supplementary became effective upon filing with respect to the payment of distributions and other amounts. Except in instances relating to preservation of the Company's qualification as a REIT or pursuant to the Company’s special optional redemption right, the Series A Preferred Stock is not redeemable prior to June 18, 2024. On and after June 18, 2024, the Company may, at its option, redeem the Series A Preferred Stock, in whole, at any time, or in part, from time to time, for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but excluding, the redemption date.

Upon the occurrence of a change of control (as defined in the articles supplementary designating the terms of the Series A Preferred Stock), the Company has a special optional redemption right that enables it to redeem the Series A Preferred Stock, in whole or in part and within 120 days after the first date on which a change of control has occurred resulting in neither the Company nor the surviving entity having a class of common stock listed on the NYSE, NYSE American, or NASDAQ or the acquisition of beneficial ownership of its stock entitling a person to exercise more than 50% of the total voting power of all our stock entitled to vote generally in election of directors. The special optional redemption price is $25.00 per share, plus any accrued and unpaid dividends (whether or not declared) to, but excluding, the date of redemption.

~~Upon the occurrence of a change of control, holders will have the right (unless the Company has elected to exercise its~~

~~special optional redemption right to redeem their Series A Preferred Stock) to convert some or all of such holder’s Series A~~

~~Preferred Stock into a number of shares of the Company's common stock equal to the lesser of:~~

the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference plus the amount of any accrued and unpaid distributions to, but not including, the change of control conversion date (unless the change of control conversion date is after a record date for a Series A Preferred Stock distribution payment and prior to the corresponding Series A Preferred Stock distribution payment date, in which case no additional amount for such accrued and unpaid distribution will be included in this sum) by (ii) the Common Stock Price (as defined in the articles supplementary designating the terms of the Series A Preferred Stock); and

~~2.97796 (i.e., the Share Cap), subject to certain adjustments;~~

subject, in each case, to certain adjustments and provisions for the receipt of alternative consideration of equivalent value as described in the articles supplementary designating the terms of the Series A Preferred Stock.MSDAT.

Noncontrolling Interests

As of ~~June 30, 2019~~both March 31, 2020 and December 31, ~~2018,~~2019, the Company held a ~~71.4% and 74.5%~~72.6% common interest ~~respectively,~~ in the Operating Partnership. As of ~~June 30, 2019,~~March 31, 2020, the Company also held a preferred interest in the Operating Partnership in the form of preferred units with a liquidation preference of $63.3 million. The Company is the primary beneficiary of the Operating Partnership as it has the power to direct the activities of the Operating Partnership and the rights to absorb ~~71.4%~~72.6% of the net income of the Operating Partnership. As the primary beneficiary, the Company consolidates the financial position and results of operations of the Operating Partnership. Noncontrolling interests in the Operating Partnership represent units of limited partnership interest in the Operating Partnership not held by the Company. As of ~~June 30, 2019,~~March 31, 2020, there were ~~21,177,692~~21,272,962 Class A units of limited partnership interest in the Operating Partnership ("Class A Units") not held by the Company. The Company's financial position and results of operations are the same as those of the Operating Partnership.

Additionally, the Operating Partnership owns a majority interest in certain non-wholly-owned operating and development properties. The noncontrolling interest for investment entities ~~included $4.6~~of $4.4 million ~~related~~relates to the minority ~~partner's~~partners' interest in certain joint venture entities as of March 31, 2020, including 1405 Point ~~as of June 30, 2019.~~and Hoffler Place. The noncontrolling interest for ~~all other~~ consolidated real estate entities was ~~zero~~$4.5 million as of ~~June 30, 2019 and~~ December 31, ~~2018.~~2019.

On January 2, 2019, due to the holders of Class A Units tendering an aggregate of 118,471 Class A Units for redemption by the Operating Partnership, the Company elected to satisfy the redemption requests through the issuance of an equal number of shares of common stock.

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~~On May 23, 2019, the Operating Partnership issued 4,125,759 Class A Units valued at $68.1 million in connection with the acquisition of Red Mill Commons and Marketplace at Hilltop.~~

On May 30, 2019, the Operating Partnership issued 60,000 Class A Units valued at $1.0 million in exchange for the remaining 35% ownership interest in Brooks Crossing Office, which was previously owned by Tidewater Partners.

~~Common Stock~~ Dividends and ~~Class A Unit~~ Distributions

On January ~~3, 2019,~~2, 2020, the Company paid cash dividends of ~~$10.0~~$11.8 million to common stockholders, and the Operating Partnership paid cash distributions of ~~$3.4~~$4.5 million to holders of Class A Units.

On ~~April 4, 2019,~~January 15, 2020, the Company paid cash dividends of ~~$11.0~~$1.1 million to ~~common stockholders, and~~ the ~~Operating Partnership paid cash distributions of $3.6 million to~~ holders of ~~Class~~the Series A ~~Units.~~Preferred Stock.

On ~~May 7, 2019,~~February 20, 2020, the Board of Directors declared a cash dividend and distribution of ~~$0.21~~$0.22 per share and unit payable on ~~July 3, 2019~~April 2, 2020 to stockholders and unitholders of record on ~~June 26, 2019.~~

~~Subsequent to June 30, 2019~~March 25, 2020.

On ~~July~~February 20, 2020, the Board of Directors declared a cash dividend of $0.421875 per share on its 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock payable on April 15, 2020 to stockholders of record on April 1, 2019, due to the holders of Class A Units tendering an aggregate of 125,118 Class A Units for redemption by the Operating Partnership, the Company elected to satisfy the redemption requests through the issuance of an equal number of shares of common stock.2020.

~~On July 3, 2019, the Company paid cash dividends~~

Table of ~~$11.1 million to common stockholders, and the Operating Partnership paid cash distributions of $4.4 million to holders of Class A Units.~~Contents

In July 2019, the Company sold an aggregate of 62,823 shares of common stock at a weighted average price of $16.84 per share under the ATM Program, receiving net proceeds, after offering costs and commissions, of $1.0 million.

~~12.~~11. Stock-Based Compensation

The Company’s Amended and Restated 2013 Equity Incentive Plan (the "Equity Plan") permits the grant of restricted stock awards, stock options, stock appreciation rights, performance units, and other equity-based awards up to an aggregate of 1,700,000 shares of common stock. As of ~~June 30, 2019,~~March 31, 2020, there were ~~895,257~~769,404 shares available for issuance under the Equity Plan.

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, the Company granted an aggregate of ~~152,292~~142,247 shares of restricted stock to employees and non-employee directors with a weighted average grant date fair value of ~~$15.39~~$17.26 per share. Employee restricted stock awards generally vest over a period of two years: one-third immediately on the grant date and the remaining two-thirds in equal amounts on the first two anniversaries following the grant date, subject to continued service to the Company. Non-employee director restricted stock awards vest either immediately upon grant or over a period of one year, subject to continued service to the Company. Unvested restricted stock awards are entitled to receive dividends from their grant date.

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, the Company issued performance-based awards in the form of restricted stock units to certain employees. The performance period for these awards is three years, with a required two-year service period immediately following the expiration of the performance period in order to fully vest. The compensation expense and the effect on the Company’s weighted average diluted shares calculation were immaterial. During the ~~six~~three months ended ~~June 30, 2019, 10,755~~March 31, 2020, 10,600 shares were issued with a grant date fair value of ~~$15.42~~$18.08 per share due to the partial vesting of performance units awarded to certain employees in ~~2016.~~2017.

During the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ the Company recognized ~~$0.5~~$1.3 million and ~~$0.4 million, respectively, of stock-based compensation cost. During the six months ended June 30, 2019 and 2018, the Company recognized $1.5 million and $1.2~~$1.1 million, respectively, of stock-based compensation cost. As of ~~June 30, 2019,~~March 31, 2020, there were ~~144,426~~153,955 nonvested restricted shares outstanding; the total unrecognized compensation expense related to nonvested restricted shares was ~~$1.5~~$1.9 million, which the Company expects to recognize over the next 2124 months.

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~~13.~~12. Fair Value of Financial Instruments

Fair value measurements are based on assumptions that market participants would use in pricing an asset or a liability. The hierarchy for inputs used in measuring fair value is as follows:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — observable inputs other than quoted prices in active markets for identical assets and liabilities

Level 3 — unobservable inputs

Except as disclosed below, the carrying amounts of the Company’s financial instruments approximate their fair values. Financial assets and liabilities whose fair values are measured on a recurring basis using Level 2 inputs consist of interest rate swaps and caps. The Company measures the fair values of these assets and liabilities based on prices provided by independent market participants that are based on observable inputs using market-based valuation techniques.

Financial assets and liabilities whose fair values are not measured at fair value but for which the fair value is disclosed include the Company's notes receivable and indebtedness. The fair value is estimated by discounting the future cash flows of each instrument at estimated market rates consistent with the maturity, credit characteristics, and other terms of the arrangements, which are Level 3 inputs under the fair value hierarchy.

In certain cases, the inputs used to estimate the fair value may fall into different levels of the fair value hierarchy. For disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

Considerable judgment is used to estimate the fair value of financial instruments. The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments.

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The carrying amounts and fair values of the Company’s financial instruments as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 were as follows (in thousands):


	June 30, 2019				December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value		March 31, 2020				December 31, 2019
	(Unaudited)								Carrying Value		Fair Value		Carrying Value		Fair Value
Indebtedness	$	949,345	$	952,641	$	694,239	$	688,437	$	1,006,617	$	1,009,377	$	950,537	$	958,421
Notes receivable	144,743		144,743		138,683		138,683		178,652		173,422		159,371		159,371
Interest rate swap liabilities	8,266		8,266		2,474		2,474		16,431		16,431		7,720		7,720
Interest rate swap and cap assets	422		422		2,093		2,093		143		143		25		25

~~14.~~13. Related Party Transactions

The Company provides general contracting and real estate services to certain related party entities that are included in these condensed consolidated financial statements. Revenue from construction contracts with these entities for the three months ended ~~June 30, 2018~~March 31, 2020 was ~~$0.3 million, and gross profit from such contracts was $0.1 million. Revenue from construction contracts with related party entities for the six months ended June 30, 2018 was $1.5~~$8.5 million, and gross profit from such contracts was $0.3 million. There was no such revenue or gross profit for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019.

As of March 31, 2020 and December 31, 2019, there was $4.2 million and $1.9 million, respectively, outstanding from related parties of the Company included in net construction receivables. Real estate services fees from affiliated entities of the Company were not ~~significant~~material for any of the three ~~and six~~ months ended ~~June 30, 2019 or 2018.~~March 31, 2020 and 2019. In addition, affiliated entities also reimburse the Company for monthly maintenance and facilities management services provided to the properties. Cost reimbursements earned by the Company from affiliated entities were not ~~significant~~material for any of the three ~~and six~~ months ended ~~June 30,~~March 31, 2020, and 2019.

The general contracting services described above include contracts with an aggregate price of $79.5 million with the developer of a mixed-use project, including an apartment building, retail space, and a parking garage to be located in Virginia Beach, Virginia. The developer is owned in part by certain executives of the Company, not including the Chief Executive Officer and Chief Financial Officer. These contracts were executed in 2019 and ~~2018.~~ are projected to result in aggregate gross profit of $3.0 million to the Company, representing a gross profit margin of 4.0%. As part of these contracts and per the requirements of the lender for this project, the Company issued a letter of credit for $9.5 million to secure certain performances of the Company's subsidiary construction company under the contracts, which remains outstanding as of March 31, 2020.

The Operating Partnership entered into tax protection agreements that indemnify certain directors and executive officers of the Company from their tax liabilities resulting from the potential future sale of certain of the Company’s properties within seven (or, in a limited number of cases, ten) years of the completion of the Company’s initial public offering and formation transactions completed on May 13, 2013.

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~~15.~~14. Commitments and Contingencies

Legal Proceedings

The Company is from time to time involved in various disputes, lawsuits, warranty claims, environmental and other matters arising in the ordinary course of business. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters.

The Company currently is a party to various legal proceedings, none of which management expects will have a material adverse effect on the Company’s financial position, results of operations, or liquidity. Management accrues a liability for litigation if an unfavorable outcome is determined to be probable and the amount of loss can be reasonably estimated. If an unfavorable outcome is determined to be probable and a range of loss can be reasonably estimated, management accrues the best estimate within the range; however, if no amount within the range is a better estimate than any other, the minimum amount within the range is accrued. Legal fees related to litigation are expensed as incurred. Management does not believe that the ultimate outcome of these matters, either individually or in the aggregate, could have a material adverse effect on the Company’s financial position or results of operations; however, litigation is subject to inherent uncertainties.

Under the Company’s leases, tenants are typically obligated to indemnify the Company from and against all liabilities, costs, and expenses imposed upon or asserted against it as owner of the properties due to certain matters relating to the operation of the properties by the tenant.

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Guarantees

In connection with the Company's mezzanine lending activities, the Company has made guarantees to pay portions of certain senior loans of third parties associated with the development projects. The following table summarizes the guarantees made by the Company as of ~~June 30, 2019~~March 31, 2020 (in thousands):


Development project	Payment guarantee amount		Payment guarantee amount
The Residences at Annapolis Junction	$	8,300	$	8,300
Delray Plaza	5,180		5,180
Nexton Square	12,600		12,600
Interlock Commercial(1)	30,654		30,654
Total	$	56,734	$	56,734

(1) In May 2020, the borrower for the Interlock Commercial loan modified the senior construction loan on the project. As part of this modification, the Company agreed to increase its payment guaranty for this senior loan to $34.3 million.

Commitments

The Company has a bonding line of credit for its general contracting construction business and is contingently liable under performance and payment bonds, bonds for cancellation of mechanics liens and defect bonds. Such bonds collectively totaled ~~$29.0~~$4.0 million and ~~$34.8~~$4.3 million as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. In addition, as of March 31, 2020, the Company has outstanding a letter of credit for $9.5 million to secure certain performances of the Company's subsidiary construction company under a related party project.

The Company has entered into standby letters of credit using the available capacity under the credit facility. The letters of credit relate to the guarantee of future performance on certain of the Company’s construction contracts. Letters of credit generally are available for draw down in the event the Company does not perform.

15. Subsequent Events

The Company has evaluated subsequent events through the date on which this Form 10-Q was filed, the date on which these financial statements were issued, and identified the items below for discussion.

COVID-19

The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including the impact on its tenants, rental revenue, business partners, and construction timelines. The Company has proactively deferred the previously announced Chronicle Mill, Southern Post, and Ten Tryon development projects in order to provide additional balance sheet flexibility until economic conditions stabilize, each of which had previously been scheduled to commence during the second quarter of 2020. The extent of the pandemic’s effect on the Company’s operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic and the duration of government measures to mitigate the pandemic, all of which are uncertain and difficult to predict. As a result of the pandemic, the Company could experience material impacts on its business, results of operations and cash flows in the remainder of 2020.

The Coronavirus Aid, Relief and Economic Security Act, or the CARES Act, was enacted on March 27, 2020 in the United States. The Company continues to assess the potential impacts of this legislation, including the eligibility of the Company and its tenants for funding under programs designed to provide financial assistance to U.S. businesses. The Company has availed itself of the option to defer payment of the employer share of Social Security payroll taxes that would otherwise have been owed from the date of enactment of the CARES Act through December 31, 2020.

Leases

Due to the business disruptions and challenges severely affecting the global economy caused by the COVID-19 pandemic, the Company is working with tenants to provide rent deferrals, where warranted. See Note 2—Summary of Significant Accounting Policies for a discussion of additional guidance issued by the FASB regarding accounting for lease concessions.

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Real Estate dispositions

On April 8, 2020, the Company’s agreement to sell a portfolio of 7 retail properties for $106.5 million, as described in Note 5, was terminated.

Notes Receivable

Effective April 1, 2020, the Company placed the mezzanine loans for Delray Plaza and The Residences at Annapolis Junction on non-accrual status. These loans have accrued interest up to the point that the outstanding debt is approximately equal to the net realizable value of the underlying development projects.

In May 2020, the Company modified the Interlock Commercial loan to allow for an additional $7.0 million of loan funding for purposes of building townhome units as an additional phase of this development project. The borrower also modified the senior construction loan on the project. As part of this modification, the Company agreed to increase its payment guaranty for this senior loan to $34.3 million.

Indebtedness

In April 2020, the Company borrowed $4.9 million on its construction loans to fund development activities.

In April 2020, the Company proactively obtained a waiver from the lender for the Premier Retail/Apartments property wherein the Company will not have to meet the minimum debt service coverage requirement for the period ending June 30, ~~2019~~2020. The Company also proactively obtained a waiver from the lender for the 249 Central Park, Fountain Plaza Retail, and South Retail properties wherein the Company will not have to meet the minimum debt service coverage requirement for the periods ending June 30, 2020 and December 31, ~~2018,~~2020.

Equity

On April 2, 2020, the Company paid cash dividends of $12.4 million to common stockholders, and the Operating Partnership ~~had total outstanding letters~~paid cash distributions of ~~credit~~$4.7 million to holders of ~~$0.3~~Class A Units other than the Company.

On April 15, 2020, the Company paid cash dividends of $1.1 million to holders of shares of Series A Preferred Stock.

On April 30, 2020, the Company announced that its Board of Directors declared a cash dividend of $0.421875 per

share of Series A Preferred Stock for the second quarter of 2020. The dividend will be payable in cash on July 15, 2020

to stockholders of record on July 1, 2020.

On April 30, 2020, the Company announced that its Board of Directors suspended quarterly cash dividends on common stock and ~~$2.1 million, respectively.~~cash distributions on Class A Units.

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~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

References to "we," "our," "us," and "our company" refer to Armada Hoffler Properties, Inc., a Maryland corporation, together with our consolidated subsidiaries, including Armada Hoffler, L.P., a Virginia limited partnership (the "Operating Partnership"), of which we are the sole general partner. The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities laws. We caution investors that any forward-looking statements presented in this report, or which management may make orally or in writing from time to time, are based on beliefs and assumptions made by, and information currently available to, management. When used, the words "anticipate," "believe," "expect," "intend," "may," "might," "plan," "estimate," "project," "should," "will," "result," and similar expressions, which do not relate solely to historical matters, are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We caution you that while forward-looking statements reflect our good faith beliefs when we make them, they are not guarantees of future performance and are impacted by actual events when they occur after we make such statements. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise, and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

the impacts of the novel coronavirus ("COVID-19") pandemic and measures intended to prevent or mitigate its spread, and our ability to accurately assess and predict such impacts on our results of operations, financial condition, acquisition and disposition activities, and growth opportunities;


▪	our ability to commence or continue construction and development projects on the timeframes and terms currently anticipated;


▪	our ability to access funding under government programs designed to provide financial relief for U.S. businesses in light of the COVID-19 pandemic;

adverse economic or real estate developments, either nationally or in the markets in which our properties are ~~located;~~

~~our failure to develop~~located, including as a result of the ~~properties in our development pipeline successfully, on the anticipated timelines, or at the anticipated costs;~~ COVID-19 pandemic;

our failure to generate sufficient cash flows to service our outstanding indebtedness;

defaults on, early terminations of, or non-renewal of leases by tenants, including significant tenants;

bankruptcy or insolvency of a significant tenant or a substantial number of smaller tenants;

the inability of one or more mezzanine loan borrowers to repay mezzanine loans in accordance with their contractual terms;

difficulties in identifying or completing development, acquisition, or disposition opportunities;

our failure to successfully operate developed and acquired properties;

our failure to generate income in our general contracting and real estate services segment in amounts that we anticipate;

fluctuations in interest rates and increased operating costs;

our failure to obtain necessary outside financing on favorable terms or at all;

our inability to extend the maturity of or refinance existing debt or comply with the financial covenants in the agreements that govern our existing debt;

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financial market fluctuations;

risks that affect the general retail environment or the market for office properties or multifamily units;

the competitive environment in which we operate;

decreased rental rates or increased vacancy rates;

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conflicts of interests with our officers and directors;

lack or insufficient amounts of insurance;

environmental uncertainties and risks related to adverse weather conditions and natural disasters;

other factors affecting the real estate industry generally;

our failure to maintain our qualification as a real estate investment trust ("REIT") for U.S. federal income tax purposes;

limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our qualification as a REIT for U.S. federal income tax purposes;

changes in governmental regulations or interpretations thereof, such as real estate and zoning laws and increases in real property tax rates and taxation of REITs; and

potential negative impacts from the recent changes to the U.S. tax laws.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events, or other changes after the date of this Quarterly Report on Form 10-Q, except as required by applicable law. We caution investors not to place undue reliance on these forward-looking statements and urge investors to carefully review the disclosures we make concerning risks and uncertainties in the sections entitled "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our most recent Annual Report on Form 10-K, as well as risks, uncertainties and other factors discussed in this Quarterly Report on Form 10-Q and identified in other documents that we file from time to time with the Securities and Exchange Commission (the "SEC").

Business Description

We are a full-service real estate company with extensive experience developing, building, owning and managing high-quality, institutional-grade office, retail and multifamily properties in attractive markets primarily throughout the Mid-Atlantic and Southeastern United States. As of ~~June 30, 2019,~~March 31, 2020, our ~~stabilized~~ operating property portfolio consisted of the following properties:



Property	Segment	Location	Ownership Interest
4525 Main Street	Office	Virginia Beach, Virginia*	100	%
Armada Hoffler Tower	Office	Virginia Beach, Virginia*	100	%
Brooks Crossing Office	Office	Newport News, Virginia	100	%
One City Center	Office	Durham, North Carolina	100	%
One Columbus	Office	Virginia Beach, Virginia*	100	%
Thames Street Wharf	Office	Baltimore, Maryland	100	%
Two Columbus	Office	Virginia Beach, Virginia*	100	%
249 Central Park Retail	Retail	Virginia Beach, Virginia*	100	%
Alexander Pointe	Retail	Salisbury, North Carolina	100	%
Apex Entertainment	Retail	Virginia Beach, Virginia*	100	%
Bermuda Crossroads	Retail	Chester, Virginia	100	%
Broad Creek Shopping Center	Retail	Norfolk, Virginia	100	%
Broadmoor Plaza	Retail	South Bend, Indiana	100	%
Brooks Crossing Retail ⁽¹⁾	Retail	Newport News, Virginia	65	%
Columbus Village	Retail	Virginia Beach, Virginia*	100	%
Columbus Village II	Retail	Virginia Beach, Virginia*	100	%

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Property	Segment	Location	Ownership Interest
Commerce Street Retail	Retail	Virginia Beach, Virginia*	100	%
Courthouse 7-Eleven	Retail	Virginia Beach, Virginia	~~100~~	%
~~Dick’s at Town Center~~ ⁽¹⁾	~~Retail~~	Virginia Beach, Virginia*	100	%
Dimmock Square	Retail	Colonial Heights, Virginia	100	%
Fountain Plaza Retail	Retail	Virginia Beach, Virginia*	100	%
Gainsborough Square	Retail	Chesapeake, Virginia	100	%
Greentree Shopping Center	Retail	Chesapeake, Virginia	100	%

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~~Property~~	~~Segment~~	~~Location~~	~~Ownership Interest~~
Hanbury Village	Retail	Chesapeake, Virginia	100	%
Harper Hill Commons	Retail	Winston-Salem, North Carolina	100	%
Harrisonburg Regal	Retail	Harrisonburg, Virginia	100	%
Indian Lakes Crossing	Retail	Virginia Beach, Virginia	100	%
Lexington Square	Retail	Lexington, South Carolina	100	%
~~Lightfoot Marketplace~~Market at Mill Creek ⁽²⁾⁽¹⁾	Retail	~~Williamsburg, Virginia~~Mount Pleasant, South Carolina	70	%
Marketplace at Hilltop	Retail	Virginia Beach, Virginia	100	%
North Hampton Market	Retail	Taylors, South Carolina	100	%
North Point Center	Retail	Durham, North Carolina	100	%
Oakland Marketplace	Retail	Oakland, Tennessee	100	%
Parkway Centre	Retail	Moultrie, Georgia	100	%
Parkway Marketplace	Retail	Virginia Beach, Virginia	100	%
Patterson Place	Retail	Durham, North Carolina	100	%
Perry Hall Marketplace	Retail	Perry Hall, Maryland	100	%
Providence Plaza	Retail	Charlotte, North Carolina	100	%
Red Mill Commons	Retail	Virginia Beach, Virginia	100	%
Renaissance Square	Retail	Davidson, North Carolina	100	%
Sandbridge Commons	Retail	Virginia Beach, Virginia	100	%
Socastee Commons	Retail	Myrtle Beach, South Carolina	100	%
South Retail	Retail	Virginia Beach, Virginia*	100	%
South Square	Retail	Durham, North Carolina	100	%
Southgate Square	Retail	Colonial Heights, Virginia	100	%
Southshore Shops	Retail	Chesterfield, Virginia	100	%
Stone House Square	Retail	Hagerstown, Maryland	100	%
Studio 56 Retail	Retail	Virginia Beach, Virginia*	100	%
Tyre Neck Harris Teeter	Retail	Portsmouth, Virginia	100	%
Wendover Village	Retail	Greensboro, North Carolina	100	%
1405 Point	Multifamily	Baltimore, Maryland	79	%
Encore Apartments	Multifamily	Virginia Beach, Virginia*	100	%
Greenside Apartments	Multifamily	Charlotte, North Carolina	100	%
Hoffler Place	Multifamily	Charleston, South Carolina	93	%
Johns Hopkins Village	Multifamily	Baltimore, Maryland	100	%
Liberty Apartments	Multifamily	Newport News, Virginia	100	%
Premier Apartments	Multifamily	Virginia Beach, Virginia*	100	%
Smith’s Landing	Multifamily	Blacksburg, Virginia	~~100~~	%
~~Premier Apartments (Town Center Phase VI)~~	~~Multifamily~~	Virginia Beach, Virginia*	100	%
The Cosmopolitan	Multifamily	Virginia Beach, Virginia*	100	%

*Located in the Town Center of Virginia Beach


~~(1)~~	Dicks Sporting Goods, one of the anchor tenants at the property currently known as “Dick’s at Town Center”, has notified the Company that it will not renew its lease beyond January 31, 2020, the end of the current term. The Company is actively evaluating alternate uses and users of the space that the tenant currently occupies.


~~(2)~~	~~We are entitled to a preferred return of 9% on our investment in Lightfoot Marketplace.~~

(1) We are entitled to a preferred return on our investment in this property.

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As of ~~June 30, 2019,~~March 31, 2020, the following properties that we consolidate for financial reporting purposes were either under development or not yet stabilized:



Property	Segment	Location	Ownership Interest
Wills Wharf	Office	Baltimore, Maryland	100	%
~~Brooks Crossing Office~~	~~Office~~	~~Newport News, Virginia~~	~~100~~	%
~~Brooks Crossing Retail~~ ⁽¹⁾	~~Retail~~	~~Newport News, Virginia~~	65	%
~~Market at Mill Creek~~ ⁽²⁾	~~Retail~~	~~Mount Pleasant, South Carolina~~	70	%
Premier Retail ~~(Town Center Phase VI)~~	Retail	Virginia Beach, Virginia*	100	%
~~Greenside (Harding Place)~~ ⁽³⁾	~~Multifamily~~	~~Charlotte, North Carolina~~	80	%
~~Hoffler Place (King Street)~~	~~Multifamily~~	~~Charleston, South Carolina~~	~~92.5~~	%
Summit Place ~~(Meeting Street)~~	Multifamily	Charleston, South Carolina	90	%

~~(1) We are entitled to a preferred return of 8% on our investment in Brooks Crossing Retail.~~

~~(2) We are entitled to a preferred return of up to 10% on our investment in Market at Mill Creek.~~

~~(3) We are entitled to a preferred return of 9% on a portion of our investment in Greenside.~~

*Located in the Town Center of Virginia Beach

Acquisitions

On ~~February 6, 2019,~~January 10, 2020, we ~~acquired an additional outparcel phase of Wendover Village~~purchased land in ~~Greensboro,~~Charlotte, North Carolina for a ~~contract~~purchase price of ~~$2.7 million. This phase is leased by~~$6.3 million for the development of a ~~single tenant.~~mixed-use property.

On March ~~14, 2019,~~20, 2020, we ~~acquired~~purchased land in Belmont, North Carolina for a purchase price of $2.3 million for the ~~office and retail portions~~development of a mixed-use property.

Impact of COVID-19 on our Business

Overview

In light of the ~~One City Center project~~changing nature of the COVID-19 pandemic and uncertainty regarding the duration, severity, and possible resurgence of the pandemic in ~~exchange~~future periods, the impact that the COVID-19 pandemic will have on our business is currently unknown and unquantifiable. While the full extent of the COVID-19 pandemic’s impact on the U.S. economy and the U.S. real estate industry remains to be seen, the pandemic has already presented significant challenges for ~~a redemption~~us and many of our ~~37% equity ownership~~tenants. In the near-term, we and many of our tenants are focusing on implementing contingency plans to manage business disruptions caused by the pandemic and related actions intended to mitigate its spread. In the long-term, REITs and other real estate companies might need to re-assess and consider modifying their operating models, underwriting criteria, and liquidity position to mitigate the impacts of future economic downturns, including as a result of the potential resurgence of the COVID-19 pandemic in future months, the timing, severity, and duration of which cannot be predicted.

We anticipate the global health crisis caused by COVID-19 and the related actions intended to mitigate its spread will continue to adversely affect business activity, particularly relating to our retail tenants, across the markets in which we operate. We have observed the impact of COVID-19 manifest in the ~~joint venture~~form of business closures or significantly limited operations in our retail portfolio, with ~~Austin Lawrence Partners,~~the exception of tenants operating in certain "essential" businesses, which ~~totaled $23.0 million as~~has resulted, and may in the future result in, a decline in on-time rental payments, increased requests from tenants for temporary rental relief and potentially permanent closure of certain businesses. We expect these conditions to continue in varying duration and severity until such time when the COVID-19 pandemic is effectively contained. When COVID-19 is contained, depending on the rate and effectiveness of the ~~acquisition date,~~containment efforts deployed by various national, state, and local governments, we anticipate a ~~cash~~rebound in economic activity, although we are unable to predict the nature, timing, and sustainability of an economic recovery.

In an effort to protect the health and safety of our employees, we took proactive, aggressive actions to adopt social distancing policies at our offices, properties, and construction jobsites, including: transitioning our office employees to a remote work environment, which was greatly assisted by recent enhancements to our IT systems; limiting the number of employees attending in-person meetings; implementing a company-wide ban on most travel; and ensuring all construction jobsites continue to comply with state and local social distancing and other health and safety protocols implemented by the Company.

To further strengthen our financial flexibility and efficiently manage through the uncertainty caused by COVID-19, our Board of Directors suspended the payment of ~~$23.2 million.~~

On April 24, 2019, we purchased a 79% controlling interest in the partnership that owns 1405 Point, a 17-story luxury high-rise apartment building located in the emerging Harbor Point area of the Baltimore waterfront in exchange for extinguishing our $31.3 million note receivablequarterly cash dividends on ~~the project, making a cash payment of $0.3 million, and assuming a loan payable of $64.9 million.~~

On May 23, 2019, we acquired Red Mill Commons and Marketplace at Hilltop from Venture Realty Group for consideration comprised of 4.1 million Class A Units, the assumption of $35.7 million of mortgage debt, and $4.5 million in cash. The negotiated price was $105.0 million, which contemplated the priceshares of our common stock and Class A common units. In addition, Lou Haddad, our President and Chief Executive Officer, voluntarily elected to reduce his base compensation by 25%, and each of ~~$15.55 per share when the purchase~~our directors, including Dan Hoffler and ~~sale agreement was executed. In connection~~Russ Kirk, voluntarily elected to reduce their cash retainers and annual equity awards by 25%, in each case effective as of May 1, 2020.

From an operational perspective, we have remained in regular communication with ~~the acquisition, we~~our tenants, property managers, and ~~the Operating Partnership entered into a tax protection agreement with the contributors pursuant to which we~~vendors, and, the Operating Partnership agreed, subject to certain exceptions, to indemnify the contributors for up to 10 years against certain tax liabilities incurred by them, if such liabilities result from a transaction involving a direct or indirect taxable disposition of either or both of these properties or if the Operating Partnership fails to maintain and allocatewhere appropriate, have provided guidance relating to the ~~contributors for taxation purposes minimum levels~~availability of ~~Operating Partnership liabilities.~~

~~On June 26, 2019,~~government relief programs that could support our tenants’ businesses. In response to the market and industry trends, we ~~acquired Thames Street Wharf, a Class A office building located in the Harbor Point development of Baltimore, Maryland, for $101.0 million in cash.~~

~~Dispositions~~

~~On April 1, 2019, we sold Waynesboro Commons for a sale price of $1.1 million. There was no gain or loss recognized on the disposition.~~

also have pursued, and expect to

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~~Second~~continue to pursue, cost-saving initiatives to align our overall cost structure, including proactively deferring previously announced development activity at several of our projects, postponing all acquisition activity for the foreseeable future, slowing down redevelopment activity at The Cosmopolitan, and suspending non-essential capital expenditures. Although we believe these measures and other measures we may implement in the future will help mitigate the financial impacts of the pandemic on our business, there can be no assurances that we will accurately forecast the impact of adverse economic conditions on our business or that we will effectively align our cost structure, capital investments, and other expenditures with our revenue and spending levels in the future.

To evaluate market trends affecting public REITs across asset classes and to assess our response to COVID-19 relative to our peers, we have been monitoring information that has been released by public REITs, summary data released by the National Association of Real Estate Investment Trusts ("Nareit") and other publicly available sources, and information obtained during our regular discussions with tenants. While we view information gathered from publicly available sources as helpful in assessing broader trends affecting the commercial real estate industry, we can provide no assurances that the estimates and assumptions used in preparing this third-party information are applicable to our business or ultimately will prove to be accurate. In addition, our asset management team, together with the rest of senior management, has dedicated significant resources to monitoring detailed portfolio performance on a real-time basis, including rent collections, requests for rent relief and uncollected payments, as well as negotiating rent deferments and other relief with certain of our tenants.

We will continue to actively monitor the implications of the COVID-19 pandemic on our and our tenants’ businesses and may take further actions to alter our business practices if we determine that such changes are in the best interests of our employees, tenants, residents, stockholders, and third-party construction customers, or as required by federal, state, or local authorities. It is not clear what the potential effects of such alterations or modifications, if any, may have on our business, including the effects on our tenants and residents and the corresponding impact on our results of operations and financial condition for the remainder of fiscal 2020 and thereafter.

The Coronavirus Aid, Relief and Economic Security Act, or the CARES Act, was enacted on March 27, 2020 in the United States. We continue to assess the potential impacts of this legislation, including our eligibility and our tenants for funding under programs designed to provide financial assistance to U.S. businesses. We have availed ourselves of the option to defer payment of the employer share of Social Security payroll taxes that would otherwise have been owed from the date of enactment of the CARES Act through December 31, 2020.

We believe the diversification of our business across multiple asset classes (i.e., office, retail and multifamily), together with our third-party construction business, will help to mitigate the impact of the pandemic on our business to a greater extent than if our business were concentrated in a single asset class. However, as discussed in greater detail below, we expect the impact of the pandemic to continue to have a particularly adverse effect on many of our retail tenants, which will continue to adversely affect our results of operations even if the performance of our office and multifamily assets and our construction business remain close to historical levels. Furthermore, if the impacts of the pandemic continue for an extended period of time, we expect that certain office tenants and multifamily residents will experience greater financial distress, which could result in late payments, requests for rental relief, business closures, decreases in occupancy, reductions in rent, or increases in rent concessions or other accommodations, as applicable.

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Operating Property Portfolio

As of April 24, 2020, we had collected approximately 78% of expected rents under in-place leases for the month of April 2020. The chart below sets forth certain information regarding summary of overall April rent collections ($ in thousands):


(1)	WeWork at One City Center excluded. A portion of March rent was refunded and April rent was not charged due to a loss of elevator service resulting from a fire in an apartment over the office space. In May 2020, we received business interruption insurance proceeds of $456,000 to cover rent for the period from March 15, 2020 to May 31, 2020.


(2)	Immaterial $30,000 of uncollectable multifamily rent excluded.

Office Portfolio

The chart below sets forth certain information regarding the April rent collections of our office portfolio as of April 24, 2020. Data reported below relates to April rent charges and collections for office tenants through April 24, 2020, and does not correspond to the reporting segment classification of the properties as a whole ($ in thousands):


(1)	WeWork at One City Center excluded. A portion of March rent was refunded and April rent was not charged due to a loss of elevator service resulting from a fire in an apartment over the office space. In May 2020, we received business interruption insurance proceeds of $456,000 to cover rent for the period from March 15, 2020 to May 31, 2020.

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Retail Portfolio

In an effort to contain COVID-19 or slow its spread, state and local governments have enacted various measures, including orders to close all businesses not deemed essential, isolate residents to their homes or places of residence, and practice social distancing when engaging in essential activities. These government-imposed measures, coupled with customers reducing their purchasing activity in light of health concerns or personal financial distress, have resulted in significant disruptions to retail businesses around the country, including in the markets in which we own retail assets.

The chart below sets forth certain information regarding the April rent collections of our retail portfolio as of April 24, 2020. Data reported relates to April rent charges and collections for retail tenants through April 24, 2020, and does not correspond to the reporting segment classification of the properties as a whole ($ in thousands):


(1)	As a percentage of April rent and recovery charges

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The chart below sets forth certain information regarding the April rent composition of our retail portfolio as of April 24, 2020. Data reported relates to April rent charges and collections for retail tenants through April 24, 2020 and does not correspond to the reporting segment classification of the properties as a whole.


(1)	As a percentage of April rent and recovery charges

Multifamily Portfolio

The chart below sets forth certain information regarding the April rent collection of our multifamily portfolio as of April 24, 2020. Data reported relates to April rent charges and collections for multifamily tenants through April 24, 2020, and does not correspond to the reporting segment classification of the properties as a whole ($ in thousands):

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Due to recent actions taken by state governments and limited working capacity for government courts and agencies, certain properties in our multifamily portfolio are subject to increased restrictions that limit our ability evict tenants or charge late fees. Details are as follows:


•	1405 Point: State restriction prohibits evictions of tenants effected by COVID-19. Evictions cannot be processed until the state of emergency is terminated and the catastrophic health emergency is rescinded.


•	Encore Apartments: State restriction applies due to limited working capacity of the courts. Eviction paperwork can be filed electronically but will not be processed until May 17, 2020 at the earliest.


•	Greenside Apartments: State restriction applies due to limited working capacity of the courts. Eviction paperwork can be filed electronically but will not be processed until June 1, 2020 at the earliest.


•	Hoffler Place: State restriction applies due to limited working capacity of the courts. Eviction paperwork can be filed electronically but will not be processed until May 15, 2020 at the earliest.


•	Johns Hopkins Village: State restriction prohibits evictions of tenants effected by COVID-19. Evictions cannot be processed until the state of emergency is terminated and the catastrophic health emergency is rescinded.

•

Liberty Apartments: CARES Act restrictions apply. We are unable to issue a notice to vacate or institute an eviction action based on non-payment of rent or to charge fees or penalties related to such nonpayment of rent during the 120-day moratorium ending on July 25, 2020. Following that date, the landlord cannot require a tenant to vacate until at least 30 days after the landlord has issued the tenant a notice to vacate.


•	Premier Apartments: State restriction applies due to limited working capacity of courts. Eviction paperwork can be filed electronically but will not be processed until May 17, 2020 at the earliest.

•

Smith's Landing: CARES Act restrictions apply. We are unable to issue a notice to vacate or institute an eviction action based on non-payment of rent or to charge fees or penalties related to such nonpayment of rent during the 120- day moratorium ending on July 25, 2020. Following that date, the landlord cannot require a tenant to vacate until at least 30 days after the landlord has issued the tenant a notice to vacate.

•

The Cosmopolitan: CARES Act restrictions apply. We are unable to issue a notice to vacate or institute an eviction action based on non-payment of rent or to charge fees or penalties related to such nonpayment of rent during the 120- day moratorium ending on July 25, 2020. Following that date, the landlord cannot require a tenant to vacate until at least 30 days after the landlord has issued the tenant a notice to vacate.

Construction and Development Business

As of the date of this quarterly report on Form 10-Q, all of our construction jobsites remain open and operational, and we intend to continue third-party construction work unless government-imposed restrictions are implemented that prohibit or significantly restrict the continuation of construction work. As of March 31, 2020, we had a third-party construction backlog of approximately $235.6 million.

With respect to our development pipeline, we proactively deferred the Chronicle Mill, Southern Post, and Ten Tryon development projects in order to provide additional balance sheet flexibility until economic conditions stabilize, each of which had previously been scheduled to commence during the second quarter of 2020. The Summit Place and Wills Wharf developments remain on schedule for delivery in 2020 as previously disclosed with sufficient construction loan commitments to fund the remaining estimated costs to complete; however, the disruption in global supply chains and our desire to prioritize the health and safety of our workforce may cause delays.

Mezzanine Lending Program

We continue to monitor the development projects securing our five mezzanine loans:

Delray Plaza: We had previously planned to purchase this project from the developer but have opted instead to allow the developer to market and sell the project to a third party, resulting in an extended hold period for this loan. Effective April 1, 2020, we have stopped recognizing interest on this loan for accounting purposes since collection of additional interest accruals is less certain. Interest will continue to accrue on this loan and will be due and payable by the developer upon a capital event.

The Residences at Annapolis Junction: The developer of this project continues to lease up the project and market it to potential buyers. These activities have taken longer than originally anticipated and include the recent appointment of a new property management company. Effective April 1, 2020, we have stopped recognizing interest on this loan for accounting purposes since collection of additional interest accruals is less certain. Interest will continue to accrue on this loan and will be due and payable by the developer upon a capital event. The developer plans to sell the project once it is stabilized.

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Nexton Square: We plan to exercise our option to purchase Nexton Square once the project is stabilized. Development activities are nearing completion, and this purchase option still appears to be economically advantageous to us.

Solis Apartments at Interlock: This project is estimated to be completed during the second quarter of 2021. Current estimates of future operating results and projected sales proceeds from this project continue to support the full collection of our principal and interest upon sale of the project.

Interlock Commercial: This project is estimated to be completed during the second quarter of 2021. In May 2020, we modified the mezzanine loan to allow for an additional $7.0 million of loan funding for purposes of building townhome units as an additional phase of this development project. Current estimates of future operating results and projected sales proceeds from this project continue to support the full collection of our principal and interest upon sale of the project.

With the exception of the additional commitment for the Interlock Commercial project, there are no remaining funding commitments for the outstanding mezzanine loans. We continue to monitor leasing activity at these projects, as applicable, and will monitor the impact of COVID-19 on leasing activity and development activity at each of these projects.

First Quarter ~~2019~~2020 and Recent Highlights

The following highlights our results of operations and significant transactions for the three months ended ~~June 30, 2019~~March 31, 2020 and other recent developments:

Net income attributable to common stockholders and OP Unit holders of ~~$6.0~~$8.2 million, or ~~$0.08~~$0.11 per diluted share, compared to ~~$5.9~~$6.5 million, or ~~$0.09~~$0.10 per diluted share, for the three months ended ~~June 30, 2018.~~March 31, 2019.

Funds from operations attributable to common stockholders and OP Unit holders ("FFO") of ~~$19.1~~$22.3 million, or ~~$0.27~~$0.29 per diluted share, compared to ~~$15.1~~$16.6 million, or ~~$0.24~~$0.25 per diluted share, for the three months ended ~~June 30, 2018.~~March 31, 2019. See "Non-GAAP Financial Measures."

Normalized funds from operations available to common stockholders and OP Unit holders ("Normalized FFO") of ~~$21.1~~$24.7 million, or ~~$0.30~~$0.32 per diluted share, compared to ~~$15.2~~$18.5 million, or ~~$0.24~~$0.27 per diluted share, for the three months ended ~~June 30, 2018.~~March 31, 2019. See "Non-GAAP Financial Measures."

~~Exercised our purchase option~~Core operating property portfolio occupancy at 95.6% as of March 31, 2020 compared to ~~acquire a 79% controlling interest in 1405 Point, the 17-story luxury high-rise apartment building located in the Harbor Point area~~96.5% as of ~~the Baltimore waterfront, in exchange for the Company's mezzanine loan investment and the assumption of existing debt.~~December 31, 2019.

~~Completed the acquisitions~~Third-party construction backlog as of ~~Red Mill Commons and Marketplace at Hilltop in Virginia Beach, Virginia for aggregate consideration of $105.0 million, including $63.8 million in OP Units.~~

~~Completed the acquisition of Thames Street Wharf, a certified LEED Gold Class A trophy office building located on the waterfront in the Harbor Point development of Baltimore, Maryland, for $101.0~~March 31, 2020 was $235.6 million.

~~Announced Southern Post, a new 240,000 square foot mixed-use development in historic downtown Roswell, Georgia. We will be~~Reaffirmed our commitment to best-in-class corporate governance practices by waiving the ~~majority partner in a joint venture~~option to ~~develop the project and anticipates commencing construction in the first quarter of 2020. Estimated development and construction costs for the project are expected~~classify our Board without stockholder approval under Maryland law, commonly referred to ~~total approximately $80 million.~~as MUTA.

~~Raised $61.3 million of net proceeds before offering expenses~~Established a Sustainability Committee to support the Company's ongoing commitment to environmental, workplace health and safety, corporate social responsibility, corporate governance, and other sustainability matters. The Sustainability Committee's 2019 Report can be accessed through ~~an underwritten public offering of 2.53 million shares of 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock at a public offering price of $25.00 per share.~~the Company's website, ArmadaHoffler.com/Sustainability.

~~Raised $7.6 million~~Adopted several new corporate governance policies related to: environmental matters, human rights, vendor code of ~~gross proceeds through our at-the-market equity offering program at an average price~~business conduct, clawback of ~~$16.89 per share during the quarter ended June 30, 2019.~~incentive compensation, and anti-hedging.

Segment Results of Operations

As of ~~June 30, 2019,~~March 31, 2020, we operated our business in four segments: (i) office real estate, (ii) retail real estate, (iii) multifamily residential real estate, and (iv) general contracting and real estate services, which are conducted through our taxable REIT subsidiaries ("TRS"). Net operating income (segment revenues minus segment expenses) ("NOI") is the measure used by management to assess segment performance and allocate our resources among our segments. NOI is not a measure of operating income or cash flows from operating activities as measured by accounting principles generally accepted in the United States ("GAAP") and is not indicative of cash available to fund cash needs. As a result, NOI should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate NOI in the same manner. We consider NOI to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core

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operations of our real estate and construction businesses. See Note 3 to our condensed consolidated financial statements in Item 1 of this Quarterly Report on Form 10-Q for a reconciliation of NOI to net income.

We define same store properties as those properties that we owned and operated and that were stabilized for the entirety of both periods presented. We generally consider a property to be stabilized upon the earlier of: (i) the quarter after the property reaches 80% occupancy or (ii) the thirteenth quarter after the property receives its certificate of occupancy. Additionally, any property that is fully or partially taken out of service for the purpose of redevelopment is no longer considered stabilized until the redevelopment activities are complete, the asset is placed back into service, and the occupancy criterion above is again met. A property may also be fully or partially taken out of service as a result of a partial disposition, depending on the significance of the portion of the property disposed. Finally, any property classified as held for sale is taken out of service for the purpose of computing same store operating results.

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Office Segment Data

Office rental revenues, property expenses, and NOI for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2019		2018		Change		2019		2018		Change		Three Months Ended March 31,
	(Unaudited)												2020		2019		Change
Rental revenues	$	7,382	$	5,288	$	2,094	$	12,938	$	10,388	$	2,550	$	10,192	$	5,556	$	4,636
Property expenses	2,506		1,932		574		4,518		3,880		638		3,692		2,012		1,680
Segment NOI	$	4,876	$	3,356	$	1,520	$	8,420	$	6,508	$	1,912	$	6,500	$	3,544	$	2,956

Office segment NOI for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~45.3% and 29.4%~~83.4%, ~~respectively,~~ compared to the ~~corresponding periods in 2018.~~three months ended March 31, 2019. The increase relates primarily to the acquisition of One City Center in March 2019, the commencement of operations at Brooks Crossing Office in April 2019, and the acquisition of Thames Street Wharf in June ~~2019, as well as increased occupancy across the rest of the office portfolio.~~2019.

Office Same Store Results

Office same store results for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ exclude One City Center, Brooks Crossing Office, and Thames Street Wharf.

Office same store rental revenues, property expenses, and NOI for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as ~~follows:~~follows (in thousands):


	Three Months Ended June 30,							Six Months Ended June 30,
	2019		2018			Change		2019		2018			Change		Three Months Ended March 31,
	(Unaudited)														2020		2019		Change
Rental revenues	$	5,428	$	5,287		$	141	$	10,754	$	10,387		$	367	$	5,303	$	5,326	$	(23	)
Property expenses	1,863		1,839			24		3,721		3,698			23		1,956		1,859		97
Same Store NOI	$	3,565	$	3,448		$	117	$	7,033	$	6,689		$	344	$	3,347	$	3,467	$	(120	)
Non-Same Store NOI	1,311		(92		)	1,403		1,387		(181		)	1,568		3,153		77		3,076
Segment NOI	$	4,876	$	3,356		$	1,520	$	8,420	$	6,508		$	1,912	$	6,500	$	3,544	$	2,956

Office same store NOI for the three ~~and six~~ months ended ~~June 30, 2019 increased 3.4% and 5.1%~~March 31, 2020 decreased 3.5%, ~~respectively,~~ compared to the ~~corresponding periods in 2018.~~three months ended March 31, 2019. The ~~increases relate~~decrease relates primarily to ~~higher~~the relocation of the Company’s construction division to space within Armada Hoffler Tower which became vacant after a tenant chose to downsize. The Company’s construction division previously occupied space at an adjacent property which is classified as retail for segment reporting purposes. Rental revenue from the Company’s construction division is eliminated for consolidation purposes. This decrease was partially offset by increased occupancy across the rest of the same store office portfolio.

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Retail Segment Data

Retail rental revenues, property expenses, and NOI for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2019		2018		Change		2019		2018		Change		Three Months Ended March 31,
	(Unaudited)												2020		2019		Change
Rental revenues	$	19,235	$	16,608	$	2,627	$	36,492	$	33,319	$	3,173	$	20,411	$	17,257	$	3,154
Property expenses	4,786		4,219		567		9,197		8,559		638		5,186		4,411		775
Segment NOI	$	14,449	$	12,389	$	2,060	$	27,295	$	24,760	$	2,535	$	15,225	$	12,846	$	2,379

Retail segment NOI for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~16.6% and 10.2%~~18.5%, ~~respectively,~~ compared to the ~~corresponding periods in 2018.~~three months ended March 31, 2019. The increase was primarily a result of ~~the acquisition of the additional outparcel phase of Wendover Village in February 2019, the three property acquisitions completed during 2018, the commencement of operations~~

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~~at Premier Retail (Part of Towncenter Phase IV) during the third quarter of 2018, increased occupancy at Lightfoot Marketplace during 2018,~~ the commencement of operations at Market at Mill Creek in April 2019 and the acquisition of ~~Redmill~~Red Mill Commons and Marketplace at Hilltop in May 2019. These increases were partially offset by the ~~disposition~~disposal of Lightfooot Marketplace in August 2019 and the loss of Dick’s Sporting Goods at Town Center. As previously disclosed, Apex Entertainment will take the entire space previously occupied by Dick’s Sporting Goods after the redevelopment and buildout of the ~~leasehold interest in the building previously leased~~facility is completed, which is expected to occur by ~~Home Depot at Broad Creek Shopping Center in December 2018 as well as the disposition of Waynesboro Commons in April 2019.~~

~~Dicks Sporting Goods, one of the anchor tenants at the property currently known as “Dick’s at Town Center”, has notified us that it will not renew its lease beyond January 31, 2020,~~ the end of ~~the current term. We are actively evaluating alternate uses and users of the space that the tenant currently occupies.~~2020.

Retail Same Store Results

Retail same store results for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ exclude ~~Lightfoot Marketplace, Broad Creek Shopping~~Apex Entertainment (formerly Dick’s at Town Center due to redevelopment), Brooks Crossing Retail, Premier Retail, ~~(part of Town Center Phase VI)~~Columbus Village (due to redevelopment), ~~Lexington Square,~~ the additional outparcel phase of Wendover Village, ~~(acquired in February 2019),~~ Market at Mill Creek, ~~and~~ Red Mill Commons, ~~and~~ Marketplace at Hilltop (acquired in May 2019)~~. In addition, retail same store results for the six months ended June 30, 2019~~, Waynesboro Commons (disposed in April 2019), and ~~2018 exclude Parkway Centre and Indian Lakes Crossing (acquired~~Lightfoot Marketplace (disposed in ~~January 2018)~~August 2019).

Retail same store rental revenues, property expenses, and NOI for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as ~~follows:~~follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2019		2018		Change		2019		2018		Change		Three Months Ended March 31,
	(Unaudited)												2020		2019		Change
Rental revenues	$	15,146	$	14,627	$	519	$	28,820	$	28,247	$	573	$	15,909	$	15,587	$	322
Property expenses	3,368		3,278		90		6,590		6,411		179		3,853		3,796		57
Same Store NOI	$	11,778	$	11,349	$	429	$	22,230	$	21,836	$	394	$	12,056	$	11,791	$	265
Non-Same Store NOI	2,671		1,040		1,631		5,065		2,924		2,141		3,169		1,055		2,114
Segment NOI	$	14,449	$	12,389	$	2,060	$	27,295	$	24,760	$	2,535	$	15,225	$	12,846	$	2,379

Retail same store NOI for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~3.8% and 1.8%~~2.2%, ~~respectively,~~ compared to the ~~corresponding periods in 2018.~~three months ended March 31, 2019. The increase was primarily the result of ~~higher recoveries from~~increased occupancy related to tenants ~~for capital expenditures~~that opened during 2019 and ~~rental accounts receivable that previously had been charged to bad debt.~~the first quarter of 2020.

Multifamily Segment Data

Multifamily rental revenues, property expenses, and NOI for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2019		2018		Change		2019		2018		Change		Three Months Ended March 31,
	(Unaudited)												2020		2019		Change
Rental revenues	$	9,761	$	6,702	$	3,059	$	17,857	$	13,590	$	4,267	$	11,686	$	8,096	$	3,590
Property expenses	4,186		3,106		1,080		7,616		6,055		1,561		4,830		3,430		1,400
Segment NOI	$	5,575	$	3,596	$	1,979	$	10,241	$	7,535	$	2,706	$	6,856	$	4,666	$	2,190

Multifamily segment NOI for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~55.0% and 35.9%~~46.9%, ~~respectively,~~ compared to the ~~corresponding periods in 2018.~~three months ended March 31, 2019. The increase was primarily a result of ~~the commencement of operations~~higher occupancy at Greenside Apartments and Premier Apartments, ~~(Part~~both of ~~Town Center Phase IV) during the third quarter of 2018,~~which were in lease-up in Q1 2019, the acquisition of 1405 Point in April 2019, ~~and increases~~the commencement of

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operations at Hoffler Place in ~~rental rates and occupancy across the rest of the multifamily portfolio, particularly~~August 2019, higher termination fees at Johns Hopkins Village, and higher rental rates at Smith’s Landing.

Multifamily Same Store Results

Multifamily same store results for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ exclude Greenside Apartments, Premier Apartments, ~~(part of Town Center Phase VI),~~ 1405 Point, Hoffler Place, and The Cosmopolitan (due to redevelopment).

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Multifamily same store rental revenues, property expenses and NOI for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as ~~follows:~~follows (in thousands):


	Three Months Ended June 30,							Six Months Ended June 30,
	2019		2018		Change			2019		2018		Change		Three Months Ended March 31,
	(Unaudited)													2020		2019		Change
Rental revenues	$	5,376	$	4,843	$	533		$	10,825	$	9,878	$	947	$	5,620	$	5,449	$	171
Property expenses	2,044		2,086		(42		)	4,129		4,037		92		2,093		2,086		7
Same Store NOI	$	3,332	$	2,757	$	575		$	6,696	$	5,841	$	855	$	3,527	$	3,363	$	164
Non-Same Store NOI	2,243		839		1,404			3,545		1,694		1,851		3,329		1,303		2,026
Segment NOI	$	5,575	$	3,596	$	1,979		$	10,241	$	7,535	$	2,706	$	6,856	$	4,666	$	2,190

Multifamily same store NOI for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~20.9% and 14.6%~~4.9%, ~~respectively,~~ compared to the ~~corresponding periods in 2018.~~three months ended March 31, 2019. The increase iswas primarily the result of ~~increases in rental rates and occupancy across the same store multifamily portfolio, particularly~~higher termination fees at Johns Hopkins Village and higher rental rates at Smith’s Landing.

General Contracting and Real Estate Services Segment Data

General ~~Contracting~~contracting and real estate services revenues, expenses, and gross profit for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows (in thousands):


	Three Months Ended June 30,									Six Months Ended June 30,
	2019			2018			Change			2019			2018			Change			Three Months Ended March 31,
	(Unaudited)																		2020			2019			Change
Segment revenues	$	21,444		$	20,654		$	790		$	38,480		$	43,704		$	(5,224	)	$	47,268		$	17,036		$	30,232
Segment expenses	20,123			20,087			36			36,409			42,501			(6,092		)	45,550			16,286			29,264
Segment gross profit	$	1,321		$	567		$	754		$	2,071		$	1,203		$	868		$	1,718		$	750		$	968
Operating margin	6.2		%	2.7		%	3.4		%	5.4		%	2.8		%	2.6		%	3.6		%	4.4		%	(0.8		)%

General contracting and real estate services segment profit for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~133.0% and 72.2%~~129.1%, ~~respectively,~~ compared to the ~~corresponding periods in 2018.~~three months ended March 31, 2019. The increase iswas primarily attributable to the timing of commencement of new ~~projects and the completion of other~~ projects.

The changes in third party construction backlog for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			Three Months Ended March 31,
	(Unaudited)												2020			2019
Beginning backlog	$	160,871		$	30,733		$	165,863		$	49,167		$	242,622		$	165,863
New contracts/change orders	39,177			27,807			51,196			32,376			40,440			12,019
Work performed	(21,416		)	(20,619		)	(38,427		)	(43,622		)	(47,420		)	(17,011		)
Ending backlog	$	178,632		$	37,921		$	178,632		$	37,921		$	235,642		$	160,871

As of ~~June 30, 2019,~~March 31, 2020, we had ~~$67.3~~$65.3 million in backlog on the 27^th Street project, $40.3 million in backlog on the Solis Apartments project, $33.0 million in backlog on the Interlock Commercial project, ~~$62.3~~$34.5 million in backlog on the ~~Solis~~Holly Springs Apartments project, and ~~$34.7~~$19.9 million in backlog on ~~the Boulder Lake~~Boulders Lakeside Apartments project.

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Consolidated Results of Operations

The following table summarizes the results of operations for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:


	Three Months Ended June 30,									Six Months Ended June 30,									Three Months Ended March 31,
	2019			2018			Change			2019			2018			Change			2020			2019			Change
	(unaudited, in thousands)																		(unaudited, in thousands)
Revenues
Rental revenues	$	36,378		$	28,598		$	7,780		$	67,287		$	57,297		$	9,990		$	42,289		$	30,909		$	11,380
General contracting and real estate services revenues	21,444			20,654			790			38,480			43,704			(5,224		)	47,268			17,036			30,232
Total revenues	57,822			49,252			8,570			105,767			101,001			4,766			89,557			47,945			41,612

Expenses
Rental expenses	8,027			6,522			1,505			14,752			12,946			1,806			9,375			6,725			2,650
Real estate taxes	3,451			2,735			716			6,579			5,548			1,031			4,333			3,128			1,205
General contracting and real estate services expenses	20,123			20,087			36			36,409			42,501			(6,092		)	45,550			16,286			29,264
Depreciation and amortization	13,478			9,179			4,299			23,382			18,457			4,925			14,279			9,904			4,375
Amortization of right-of-use assets - finance leases																			147			—			147
General and administrative expenses	2,951			2,764			187			6,352			5,725			627			3,793			3,401			392
Acquisition, development and other pursuit costs	57			9			48			457			93			364			27			400			(373		)
Impairment charges	—			98			(98		)	—			98			(98		)	158			—			158
Total expenses	48,087			41,394			6,693			87,931			85,368			2,563			77,662			39,844			37,818
Operating income	9,735			7,858			1,877			17,836			15,633			2,203			11,895			8,101			3,794
Interest income	5,593			2,375			3,218			10,912			4,607			6,305			7,226			5,319			1,907
Interest expense	(7,603		)	(4,497		)	(3,106		)	(13,489		)	(8,870		)	(4,619		)
Interest expense on indebtedness																			(7,959		)	(5,886		)	(2,073		)
Interest expense on finance leases																			(229		)	—			(229		)
Equity in income of unconsolidated real estate entities	—			—			—			273			—			273			—			273			(273		)
Change in fair value of interest rate derivatives	(1,933		)	(11		)	(1,922		)	(3,396		)	958			(4,354		)	(1,736		)	(1,463		)	(273		)
Other income	4			54			(50		)	64			168			(104		)
Provision for unrealized credit losses																			(377		)	—			(377		)
Other income (expense), net																			58			60			(2		)
Income before taxes	5,796			5,779			17			12,200			12,496			(296		)	8,878			6,404			2,474
Income tax benefit	30			166			(136		)	140			432			(292		)	257			110			147
Net income	5,826			5,945			(119		)	12,340			12,928			(588		)	9,135			6,514			2,621
Net loss attributable to noncontrolling interests in investment entities	320			—			320			320			—			320			92			—			92
Preferred stock dividends	(154		)	—			(154		)	(154		)	—			(154		)	(1,067		)	—			(1,067		)
Net income attributable to common stockholders and OP Unit holders	$	5,992		$	5,945		$	47		$	12,506		$	12,928		$	(422	)	$	8,160		$	6,514		$	1,646

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Rental revenues for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~$7.8 million and $10.0~~$11.4 million compared to the ~~corresponding periods in 2018~~three months ended March 31, 2019 as ~~follows:~~follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2019		2018		Change		2019		2018		Change		Three Months Ended March 31,
	(unaudited, in thousands)												2020		2019		Change
Office	$	7,382	$	5,288	$	2,094	$	12,938	$	10,388	$	2,550	$	10,192	$	5,556	$	4,636
Retail	19,235		16,608		2,627		36,492		33,319		3,173		20,411		17,257		3,154
Multifamily	9,761		6,702		3,059		17,857		13,590		4,267		11,686		8,096		3,590
	$	36,378	$	28,598	$	7,780	$	67,287	$	57,297	$	9,990	$	42,289	$	30,909	$	11,380

Office rental revenues for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~39.6% and 24.5%, respectively,~~83.4% compared to the corresponding periods in 2018, primarily as a result of the acquisition of One City Center in March 2019, the commencement of operations at Brooks Crossing Office in April 2019, and the acquisition of Thames Street Wharf in June 2019, as well as increased occupancy across the rest of the office portfolio

~~Retail rental revenues for the~~ three ~~and six~~ months ended ~~June 30,~~March 31, 2019 increased 15.8% and 9.5%, respectively, compared to the corresponding periods in 2018, primarily as a result of the acquisition of the additional outparcel phase of Wendover Village in February 2019, the three property acquisitions completed during 2018, the commencement of operations at Premier Retail (Part of Towncenter Phase IV) during the third quarter of 2018, increased occupancy at Lightfoot Marketplace during 2018, the commencement of operations at Market at Mill Creek, and the acquisition of Red Mill Commons and Marketplace at Hilltop in May 2019. These increases were partially offset by the disposition of the leasehold interest in the building previously leased by Home Depot at Broad Creek Shopping Center in December 2018 as well as the disposition of Waynesboro Commons in April 2019.

Multifamily rental revenues for the three and six months ended June 30, 2019 increased 45.6% and 31.4%, respectively, compared to the corresponding periods in 2018, primarily as a result of the commencement of operations at Greenside and Premier Apartments (Part of Town Center Phase IV) during the third quarter of 2018, the acquisition of 1405 Point in April 2019, and increases in rental rates and occupancy across the rest of the multifamily portfolio, particularly at Johns Hopkins Village and Smith’s Landing.

General contracting and real estate services revenues for the three and six months ended June 30, 2019 increased 3.8% and decreased 12.0%, respectively, compared to the corresponding periods in 2018 due to the timing of commencement of new projects and the completion of other projects.

~~Rental expenses for the three and six months ended June 30, 2019 increased $1.5 million and $1.8 million compared to the corresponding periods in 2018 as follows:~~

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 Change 2019 2018 Change
(unaudited, in thousands)
Office $ 1,853
$ 1,430
$ 423
$ 3,339
$ 2,876
$ 463
Retail 2,893
2,563
330
5,493
5,220
273
Multifamily 3,281
2,529
752
5,920
4,850
1,070
$ 8,027
$ 6,522
$ 1,505
$ 14,752
$ 12,946
$ 1,806

~~Office rental expenses for the three and six months ended June 30, 2019 increased 29.6% and 16.1%, respectively, compared to the corresponding periods in 2018,~~ primarily as a result of the acquisition of One City Center in March 2019, the commencement of operations at Brooks Crossing Office in April 2019, and the acquisition of Thames Street Wharf in June 2019.

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Retail rental ~~expenses~~revenues for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~12.9%, and 5.2%, respectively,~~18.3% compared to the ~~corresponding periods in 2018,~~three months ended March 31, 2019 primarily as a result of ~~the acquisition of Lexington Square in the third quarter of 2018, the commencement of operations at Premier Retail (Part of Town Center Phase IV) during the third quarter of 2018,~~ the commencement of operations at Market at Mill Creek in April 2019 and the acquisition of Red Mill Commons and

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Marketplace at Hilltop in May 2019. These increases were partially offset by the ~~disposition~~disposal of Lightfoot Marketplace in August 2019 and the ~~leasehold interest~~loss of Dick’s Sporting Goods at Town Center.

Multifamily rental revenues for the three months ended March 31, 2020 increased 44.3% compared to the three months ended March 31, 2019 primarily as a result of higher occupancy at Greenside Apartments and Premier Apartments, both of which were in lease-up in first quarter of 2019, the ~~building previously leased by Home Depot at Broad Creek Shopping Center in December 2018 as well as the disposition~~acquisition of ~~Waynesboro Commons~~1405 Point in April ~~2019.~~2019, the commencement of operations at Hoffler Place in August 2019, higher termination fees at Johns Hopkins Village, and higher rental rates at Smith’s Landing.

~~Multifamily~~General contracting and real estate services revenues for the three months ended March 31, 2020 increased 177.5% compared to the three months ended March 31, 2019, due to the timing of commencement of new projects.

Rental expenses for the three months ended March 31, 2020 increased $2.7 million compared to the three months ended March 31, 2019 as follows (in thousands):



	Three Months Ended March 31,
	2020		2019		Change
Office	$	2,546	$	1,486	$	1,060
Retail	3,020		2,600		420
Multifamily	3,809		2,639		1,170
	$	9,375	$	6,725	$	2,650

Office rental expenses for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~29.7% and 22.1%, respectively,~~71.3% compared to the ~~corresponding periods~~three months ended March 31, 2019 primarily as a result of the acquisition of One city Center in ~~2018,~~March 2019, the commencement of operations at Brooks Crossing Office in April 2019, and the acquisition of Thames Street Wharf in June 2019.

Retail rental expenses for the three months ended March 31, 2020 increased 16.2% compared to the three months ended March 31, 2019 primarily as a result of the commencement of operations at Market at Mill Creek in April 2019 and the acquisition of Red Mill Commons and Marketplace at Hilltop in May 2019. These increases were partially offset by the disposal of Lightfooot Marketplace in August 2019 and the loss of Dick’s Sporting Goods at Town Center.

Multifamily rental expenses for the three months ended March 31, 2020 increased 44.3% compared to the three months ended March 31, 2019 primarily as a result of higher occupancy at Greenside Apartments and Premier Apartments, ~~(Part of Town Center Phase IV) during the third quarter of 2018 and~~ the acquisition of 1405 Point in April 2019, and the commencement of operations at Hoffler Place in August 2019.

Real estate taxes for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~$0.7~~$1.2 million ~~and $1.0 million, respectively,~~ compared to the ~~corresponding periods in 2018~~three months ended March 31, 2019 as ~~follows:~~follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2019		2018		Change		2019		2018		Change		Three Months Ended March 31,
	(unaudited, in thousands)												2020		2019		Change
Office	$	653	$	502	$	151	$	1,179	$	1,004	$	175	$	1,146	$	526	$	620
Retail	1,893		1,656		237		3,704		3,339		365		2,166		1,811		355
Multifamily	905		577		328		1,696		1,205		491		1,021		791		230
	$	3,451	$	2,735	$	716	$	6,579	$	5,548	$	1,031	$	4,333	$	3,128	$	1,205

Office real estate taxes for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~30.1% and 17.4%, respectively,~~117.9% compared to the ~~corresponding periods in 2018~~three months ended March 31, 2019 primarily due to the acquisition of One City Center in March 2019, the commencement of operations at Brooks Crossing Office in April 2019, and the acquisition of Thames Street Wharf in June 2019.

Retail real estate taxes for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~14.3% and 10.9%, respectively,~~19.6% compared to the ~~corresponding periods in 2018~~three months ended March 31, 2019 primarily due to ~~the acquisition of Lexington Square in the third quarter of 2018, the commencement of operations at Premier Retail (Part of Town Center Phase IV) during the third quarter of 2018,~~ the commencement of operations at Market at Mill Creek in April 2019 and the acquisition of Red Mill Commons and Marketplace at Hilltop in May 2019. These increases were partially offset by the ~~disposition~~disposal of ~~the leasehold interest~~Lightfooot Marketplace in ~~the building previously leased by Home Depot at Broad Creek Shopping Center in December 2018 as well as the disposition~~August 2019.

Table of ~~Waynesboro Commons in April 2019.~~Contents

Multifamily real estate taxes for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~56.8% and 40.7%, respectively,~~29.1% compared to the ~~corresponding periods in 2018~~three months ended March 31, 2019 primarily as a result of ~~the commencement of operations at Greenside and Premier Apartments (Part of Town Center Phase IV) during the third quarter of 2018 and~~ the acquisition of 1405 Point in April 2019 and the commencement of operations at Hoffler Place in August 2019.

General contracting and real estate services expenses for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~0.2% and decreased 14.3%, respectively,~~179.7% compared to the ~~corresponding periods in 2018~~three months ended March 31, 2019 due to the timing of commencement of new ~~projects and the completion of other~~ projects.

Depreciation and amortization for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~46.8% and 26.7%, respectively,~~44.2% compared to the ~~corresponding periods in 2018~~three months ended March 31, 2019 as a result of development properties placed in service and acquisitions of operating properties.

Amortization of right-of-use assets - finance leases relates to new ground leases acquired since March 31, 2019 for which the Company is the lessee, which are classified as finance leases.

General and administrative expenses for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~6.8% and 11.0%, respectively,~~11.5% compared to the ~~corresponding periods in 2018~~three months ended March 31, 2019 primarily as a result of higher compensation expense and benefit costs from increased employee headcount.

Acquisition, development and other pursuit costs for the ~~six~~three months ended ~~June 30, 2019 increased~~March 31, 2020 decreased $0.4 million compared to the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019. The costs incurred in the three months ended March 31, 2019 were primarily ~~due to the write off of costs relating~~related to a potential development project that was ~~abandoned during the six months ended June 30, 2019. There were no significant write-offs during~~abandoned.

Impairment charges for the three months ended ~~June 30, 2019 and 2018.~~

~~Impairment charges of $0.1 million during the three and six months ended June 30, 2018~~March 31, 2020 relate to tenants that vacated prior to their lease expiration.

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Interest income for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~135.5% and 136.9%, respectively,~~35.9% compared to the ~~corresponding periods in 2018~~three months ended March 31, 2019 due to higher notes receivable balances due to ~~the~~ increased loan funding.

Interest expense on indebtedness for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 increased ~~69.1% and 52.1%, respectively,~~35.2% compared to the ~~corresponding periods in 2018~~three months ended March 31, 2019 primarily due to ~~the increase in net indebtedness through~~ increased borrowings on the corporate credit facility ~~the increased number of construction loans,~~ and additional borrowings on the property loans.

Interest expense on finance leases relates to new ground leases acquired since March 31, 2019 for which the Company is the lessee, which are classified as finance leases.

Equity in income of unconsolidated real estate entities for the three months ended March 31, 2019 relates to our investment in One City Center from January 1, 2019 to March 14, 2019, which was an unconsolidated real estate investment during this period.

The change in fair value of interest rate derivatives for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 experienced significant decreases compared to the ~~corresponding periods in 2018~~three months ended March 31, 2019 due to significant ~~changes~~decreases in forward LIBOR (the London Inter-Bank Offered Rate).

Provision for unrealized credit losses relates to increased expected loan losses due to changes in economic conditions and changes in the status of development projects that secure our mezzanine loans. The adoption of the new credit loss standard on January 1, 2020 generally has the effect of requiring us to recognized expected loan losses sooner than under the previous standard.

Other income ~~did not change significantly from period to period.~~remained fairly consistent.

Income tax benefit that we recognized during the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018, respectively,~~ were attributable to to the taxable profits and losses of our development and construction businesses that we operate through our TRS.

Liquidity and Capital Resources

Overview

~~We believe~~In response to the COVID-19 pandemic, we have implemented various measures to preserve our ~~primary~~ short-term liquidity position and manage our cash flow, as described below under "Responses to COVID-19." In the short-term, our liquidity requirements are expected to consist of ~~general contractor expenses,~~ operating expenses, ~~and other~~required capital expenditures, ~~associated with our properties, including tenant improvements, leasing commissions and leasing incentives,~~ dividend payments to holders of our ~~stockholders required to maintain our REIT qualification,~~

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Series A Preferred Stock, debt service, ~~capital expenditures, new real estate~~and funding commitments relating to certain development ~~projects, mezzanine loan funding requirements, and strategic acquisitions.~~projects. We expect to meet our short-term liquidity requirements through net cash provided by operations, reserves established from existing cash, borrowings under construction loans, ~~borrowings available under our credit facility,~~ and if market conditions permit, net proceeds from the sale of common stock or preferred stock through our at-the-market continuous equity offering program, ~~(the "ATM Program"),~~ which is discussed below.

Our long-term liquidity needs consist primarily of funds necessary for the repayment of debt at or prior to maturity, general contracting expenses, property development and acquisitions, tenant improvements, capital improvements, and mezzanine loan funding requirements. As discussed below, we have proactively deferred previously announced development activity at several of our projects, postponed all acquisition activity for the foreseeable future, and suspended non-essential capital expenditures. We expect to meet our long-term liquidity requirements with net cash from operations, long-term secured and unsecured indebtedness, sales of operating real estate properties, and the issuance of equity and debt securities. ~~We also~~In the future, subject to available borrowing capacity, we may fund property development and acquisitions and capital improvements using our credit facility pending long-term financing.

As of ~~June 30, 2019,~~March 31, 2020, we had unrestricted cash and cash equivalents of ~~$23.1~~$48.1 million available for both current liquidity needs as well as development and redevelopment activities. We also had restricted cash in escrow of ~~$2.9~~$4.7 million, some of which is available for capital expenditures at our operating properties. As of ~~June 30, 2019,~~March 31, 2020, we ~~had $27.7 million available under~~were fully drawn on our credit facility ~~to meet our short-term liquidity requirements~~ and ~~$104.3~~had $40.4 million available under our construction loans to fund development ~~activities.~~activities (of this amount, $4.9 million was borrowed in April 2020 to fund March 2020 development costs and $5.8 million will be drawn to pay outstanding retainage when due).

We have no loans scheduled to mature during the remainder of ~~2019.~~2020.

Responses to COVID-19

In March, 2020, as a precautionary measure to maximize our liquidity and to increase our available cash on hand, we drew down the remaining $15.0 million of availability on our senior unsecured revolving credit facility. The proceeds will be available to be used for working capital, general corporate or other purposes.

On April 28, 2020, our Board of Directors reviewed the Company’s dividend policy and determined that it would be in the best interest of the Company, its stockholders, and its OP unitholders to suspend the payment of quarterly cash dividends to common stockholders and quarterly distributions to holders of Class A common units as a measure to preserve liquidity in light of the uncertainty resulting from COVID-19. The Company expects to resume cash dividends to common stockholders and cash distributions to holders of Class A common units, subject to the earnings and financial condition of the Company and other relevant factors, but the Company can provide no timetable for the resumption of dividends and distributions and no assurances that dividends and distributions paid per share of common stock and per Class A unit, respectively, will be in an amount equal to the dividends and distributions paid for the quarter ended March 31, 2020. We will monitor our projected taxable income for 2020 and plan to distribute sufficient dividends to maintain our status as a REIT. The Board of Directors did not suspend the payment of dividends on shares of our Series A Preferred Stock.

In addition, in an effort to strengthen our financial flexibility and efficiently manage through the uncertainty caused by COVID-19, Lou Haddad, our President and Chief Executive Officer, voluntarily elected to reduce his base salary by 25%, and each of our directors, including Dan Hoffler and Russ Kirk, voluntarily elected to reduce their cash retainers and the value of their annual equity awards by 25%, in each case effective as of May 1, 2020.

The payment of dividends and the amount of such dividends depends upon matters deemed relevant by our Board of Directors on a quarterly basis, such as our results of operations, financial condition, cash requirements, future prospects, any limitations imposed by law, agreements governing our indebtedness or senior securities, including our Series A Preferred Stock, and other factors deemed relevant and appropriate. Notwithstanding the Board of Director’s decision to suspend dividends, we expect to pay dividends on our common stock in future periods to the extent necessary to maintain our REIT qualification.

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We proactively deferred the Chronicle Mill, Southern Post, and Ten Tryon development projects in order to provide additional balance sheet flexibility until economic conditions stabilize. We have also slowed down redevelopment activities at The Cosmopolitan. The chart below sets forth certain information regarding cash requirements to complete current development and redevelpment work through 2020 as of April 24, 2020.

ATM Program

On February 26, 2018, we commenced ~~our~~an at-the-market continuous equity offering program (the "Prior ATM ~~Program~~Program"), which was amended on August 6, 2019, through which we ~~are able to,~~could, from time to time, issue and sell shares of our common stock having an aggregate offering price of up to ~~$125.0~~$180.7 million. During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, we issued and sold ~~an aggregate of 2,522,186~~92,577 shares of common stock at ana weighted average price of ~~$15.16~~$18.23 per share under the Prior ATM Program, receiving net proceeds after offering costs and commissions of ~~$37.8~~$1.7 million. ~~As of July 31, 2019, we had $19.3 million in remaining availability under the 2018 ATM Program.~~

~~Series A Preferred Stock Offering~~

On ~~June 18, 2019, the Company issued 2,530,000~~March 10, 2020, we commenced a new at-the-market continuous equity offering program (the "ATM Program") through which we may, from time to time, issue and sell shares of ~~its~~our common stock and shares of our 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock ~~with a liquidation preference of $25.00 per share, which included 330,000 shares issued upon the underwriters’ full exercise of their option to purchase additional shares. Net proceeds from the~~(the "Series A Preferred Stock") having an aggregate offering ~~after the underwriting discount but before offering expenses payable by the Company, were approximately $61.3 million. The Company used the net proceeds to fund a portion of the purchase~~ price of ~~Thames Street Wharf, a 263,426 square foot office building located in~~up to $300.0 million, to or through our sales agents and, with respect to shares of our common stock, may enter into separate forward sales agreements to or through the ~~Harbor Point neighborhood~~forward purchaser. Upon commencing the ATM Program, we simultaneously terminated the Prior ATM Program. During the three months ended March 31, 2020, we did not issue any shares under this ATM Program. Shares having an aggregate offering price of

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~~Baltimore, Maryland. The balance of the net proceeds was used to repay a portion of the outstanding borrowings~~ $300.0 million remained unsold under the ~~Company’s unsecured revolving credit facility and for general corporate purposes.~~ATM Program as of May 5, 2020.

Credit Facility

We have a senior credit facility that was ~~modified~~amended and restated on ~~January 31, 2019 to increase the maximum~~October 3, 2019. The total commitments toare $355.0 million, comprised of a $150.0 million senior unsecured revolving credit facility ~~(the "revolving credit facility")~~ and a $205.0 million senior unsecured term loan facility (the "term loan facility" and, together with the revolving credit facility, the "credit facility), with a syndicate of banks. WeSubject to available borrowing capacity, we intend to use future borrowings under the credit facility for general corporate purposes, including funding acquisitions, mezzanine lending, and development and redevelopment of properties in our portfolio, and for working capital.

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The credit facility includes an accordion feature that allows the total commitments to be ~~further~~ increased to ~~$450.0~~$700.0 million, subject to certain conditions, including obtaining commitments from any one or more lenders. The revolving credit facility has a scheduled maturity date of ~~October 26, 2021,~~January 24, 2024, with two six-month extension options, subject to certain conditions, including payment of a 0.075% extension fee at each extension. The term loan facility has a scheduled maturity date of ~~October 26, 2022.~~January 24, 2025.

The revolving credit facility bears interest at LIBOR plus a margin ranging from ~~1.40%~~1.30% to ~~2.00%~~1.85% and the term loan facility bears interest at LIBOR plus a margin ranging from ~~1.35%~~1.25% to ~~1.95%~~1.80%, in each case depending on our total leverage. We are also obligated to pay an unused commitment fee of 15 or 25 basis points on the unused portions of the commitments under the revolving credit facility, depending on the amount of borrowings under the revolving credit facility. If we attain investment grade credit ratings from S&P ~~and~~or Moody’s, we may elect to have borrowings become subject to interest rates based on our credit ratings. We may, at any time, voluntarily prepay any loan under the credit facility in whole or in part without premium or penalty.

The Operating Partnership is the borrower under the credit facility, and its obligations under the credit facility are guaranteed by us and certain of ~~its~~our subsidiaries that are not otherwise prohibited from providing such guaranty.

The credit agreement contains customary representations and warranties and financial and other affirmative and negative covenants. Our ability to borrow under the credit facility is subject to our ongoing compliance with a number of financial covenants, affirmative covenants and other restrictions, including the following:

Total leverage ratio of not more than 60% (or 65% for the two consecutive quarters following any acquisition ~~that is equal~~with a purchase price of at least up to ~~or greater than 10% of our total asset value (as defined in the credit agreement),~~$100.0 million, but only up to two times during the term of the credit facility);

Ratio of adjusted EBITDA (as defined in the credit agreement) to fixed charges of not less than 1.50 to 1.0;

Tangible net worth of not less than the sum of ~~75% of tangible net worth (as defined in the credit agreement) as of September 30, 2017~~$567,106,000 and amount equal to 75% of the net equity proceeds received after June 30, ~~2017;~~2019;

Ratio of secured indebtedness to total asset value of not more than 40%;

Ratio of secured recourse debt to total asset value of not more than 20%;

Total unsecured leverage ratio of not more than 60% (or 65% for the two consecutive quarters following any acquisition ~~that is equal~~with a purchase price of at least up to ~~or greater than 10% of our total asset value,~~$100.0 million, but only up to two times during the term of the credit facility);

Unencumbered interest coverage ratio (as defined in the credit agreement) of not less than 1.75 to 1.0;

~~Ratio of unencumbered NOI (as defined in the credit agreement) to all unsecured debt of not less than 12%;~~

Maintenance of a minimum of at least 15 unencumbered properties (as defined in the credit agreement) with an unencumbered asset value (as defined in the credit agreement) of not less than $300.0 million at any time; ~~and~~

Minimum occupancy rate (as defined in the credit agreement) for all unencumbered properties of not less than 80% at any ~~time.~~time; and

Maximum aggregate rental revenue from any single tenant of not more than 30% of rental revenues with respect to all leases of unencumbered properties (as defined in the credit agreement).

The credit ~~facility~~agreement limits our ability to pay cash dividends. However, so long as no default or event of default exists, the credit agreement allows us to pay cash dividends with respect to any 12-month period in an amount not to exceed the greater of: (i) 95% of adjusted funds from operations (as defined in the credit agreement) or (ii) the amount required for us (a) to maintain our status as a REIT and (b) to avoid income or excise tax under the Code. If certain defaults or events of default exist, we may pay cash dividends with respect to any 12-month period to the extent necessary to maintain our status as a REIT. The credit ~~facility~~agreement also restricts the amount of capital that we can invest in specific categories of assets, such as unimproved land holdings, development properties, notes receivable, mortgages, mezzanine loans and unconsolidated affiliates, and restricts the amount of stock and Operating Partnership units that we may repurchase during the term of the credit facility.

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We may, at any time, voluntarily prepay any loan under the credit facility in whole or in part without premium or penalty, except for those portions subject to an interest rate swap agreement.

The credit agreement includes customary events of default, in certain cases subject to customary periods to cure. The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among other things, declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the credit facility to be immediately due and payable.

We are currently in compliance with all covenants under the credit agreement. In light of the adverse effects of the COVID-19 pandemic on our business, we proactively engaged with the lenders under our credit facility to discuss our potential options should we need to obtain a waiver or modification of certain financial covenants to avoid non-compliance in future periods.

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Consolidated Indebtedness

The following table sets forth our consolidated indebtedness as of ~~June 30, 2019~~March 31, 2020 ($ in thousands):


	Amount Outstanding			Interest Rate (a)		Effective Rate for Variable Debt			Maturity Date	Balance at Maturity		Amount Outstanding			Interest Rate ^(a)		Effective Rate for Variable Debt			Maturity Date	Balance at Maturity
Secured Debt
Greenside (Harding Place)	$	28,154		LIBOR + 2.95%		5.35	%		February 24, 2020	$	28,154
1405 Point	64,902			LIBOR + 2.75%		5.15	%		May 1, 2020	64,902
Premier (Town Center Phase VI)	21,830			LIBOR + 2.75%		5.15	%		June 29, 2020	21,830
Hoffler Place (King Street)	22,818			LIBOR + 3.24%		5.64	%		January 1, 2021	22,818
Summit Place (Meeting Street)	24,035			LIBOR + 3.24%		5.64	%		January 1, 2021	24,035
Hoffler Place ^(b)												$	29,589		LIBOR + 3.24%		4.23	%		January 1, 2021	$	29,589
Summit Place ^(b)												30,135			LIBOR + 3.24%		4.23	%		January 1, 2021	30,135
Southgate Square	21,002			LIBOR + 1.60%		4.00	%		April 29, 2021	19,462		20,342			LIBOR + 1.60%		2.59	%		April 29, 2021	19,462
4525 Main Street (b)	32,034			3.25	%	N/A			September 10, 2021	30,774
Encore Apartments (b)	24,966			3.25	%	N/A			September 10, 2021	24,006
Encore Apartments ^(c)												24,717			3.25	%				September 10, 2021	23,993
4525 Main Street ^(c)												31,717			3.25	%				September 10, 2021	30,787
Red Mill West	11,512			4.23	%	N/A			June 1, 2022	10,186		11,187			4.23	%				June 1, 2022	10,187
Thames Street Wharf	70,000			LIBOR + 1.30%		3.70	%		June 26, 2022	70,000		70,000			LIBOR + 1.30%		1.81	%	^(d)	June 26, 2022	70,000
Hanbury Village	18,768			3.78	%	N/A			August 15, 2022	17,121		18,385			3.78	%				August 15, 2022	17,454
Marketplace at Hilltop	10,709			4.42	%	N/A			October 1, 2022	9,383		10,419			4.42	%				October 1, 2022	9,383
1405 Point												53,000			LIBOR + 2.25%		3.24	%		January 1, 2023	51,532
Socastee Commons	4,619			4.57	%	N/A			January 6, 2023	4,223		4,540			4.57	%				January 6, 2023	4,223
Sandbridge Commons	8,139			LIBOR + 1.75%		4.15	%		January 17, 2023	7,247		7,959			LIBOR + 1.75%		2.74	%		January 17, 2023	7,247
Wills Wharf	—			LIBOR + 2.25%		4.90	%		June 26, 2023	—		45,759			LIBOR + 2.25%		3.24	%		June 26, 2023	45,759
249 Central Park Retail (c)	16,939			LIBOR + 1.60%		3.85	%	(d)	August 10, 2023	15,935
South Retail (c)	7,437			LIBOR + 1.60%		3.85	%	(d)	August 10, 2023	6,996
Fountain Plaza Retail (c)	10,194			LIBOR + 1.60%		3.85	%	(d)	August 10, 2023	9,590
Lightfoot Marketplace	17,900			LIBOR + 1.75%		4.77	%	(e)	October 12, 2023	17,900
249 Central Park ^(e)												16,772			LIBOR + 1.60%		3.85	%	^(d)	August 10, 2023	15,935
Fountain Plaza Retail ^(e)												10,093			LIBOR + 1.60%		3.85	%	^(d)	August 10, 2023	9,590
South Retail ^(e)												7,363			LIBOR + 1.60%		3.85	%	^(d)	August 10, 2023	6,996
One City Center	25,540			LIBOR + 1.85%		4.25	%		April 1, 2024	22,559		25,159			LIBOR + 1.85%		2.84	%		April 1, 2024	22,559
Red Mill Central	2,625			4.80	%	N/A			June 17, 2024	1,764		2,494			4.80	%				June 17, 2024	1,765
Premier Apartments ^(f)												16,750			LIBOR + 1.55%		2.54	%		October 31, 2024	15,848
Premier Retail ^(f)												8,250			LIBOR + 1.55%		2.54	%		October 31, 2024	7,806
Red Mill South	6,285			3.57	%	N/A			May 1, 2025	4,383		6,062			3.57	%				May 1, 2025	4,383
Brooks Crossing Office	13,602			LIBOR + 1.60%		4.00	%		July 1, 2025	11,773		14,411			LIBOR + 1.60%		2.59	%		July 1, 2025	10,653
Market at Mill Creek	14,278			LIBOR + 1.55%		3.95	%		July 12, 2025	12,098		14,034			LIBOR + 1.55%		2.54	%		July 12, 2025	10,635
Johns Hopkins Village	52,256			LIBOR + 1.25%		4.19	%	(f)	August 7, 2025	45,967		51,566			LIBOR + 1.25%		4.19	%	^(d)	August 7, 2025	45,967
North Point Center Note 2	2,287			7.25	%	N/A			September 15, 2025	1,344
North Point Center-Phase II												2,193			7.25	%				September 15, 2025	1,344
Lexington Square	14,820			4.50	%	N/A			September 1, 2028	12,044		14,633			4.50	%				September 1, 2028	12,044
Red Mill North	4,443			4.73	%	N/A			December 31, 2028	3,295		4,370			4.73	%				December 31, 2028	3,295
Greenside Apartments												33,828			3.17	%				December 15, 2029	26,250
Smith's Landing	18,583			4.05	%	N/A			June 1, 2035	—		17,966			4.05	%				June 1, 2035	384
Liberty Apartments	14,303			5.66	%	N/A			November 1, 2043	—		14,094			5.66	%				November 1, 2043	—
The Cosmopolitan	44,088			3.35	%	N/A			July 1, 2051	—		43,506			3.35	%				July 1, 2051	—
Total secured debt	$	629,068								$	519,789	$	661,293								$	545,205
Unsecured Debt
Senior unsecured revolving credit facility	122,000			LIBOR+1.40%-2.00%		3.95	%		October 26, 2021	122,000		$	150,000		LIBOR+1.30%-1.85%		2.49	%		January 24, 2024	$	150,000
Senior unsecured term loan	55,000			LIBOR+1.35%-1.95%		3.90	%		October 26, 2022	55,000		19,500			LIBOR+1.25%-1.80%		2.44	%	^(g)	January 24, 2025	19,500
Senior unsecured term loan	150,000			LIBOR+1.35%-1.95%		3.50%-4.28%		(d)(f)	October 26, 2022	150,000		185,500			LIBOR+1.25%-1.80%		1.95%-4.47%		^(d)	January 24, 2025	185,500
Total unsecured debt	$	327,000								$	327,000	$	355,000								$	355,000
Total principal balances	$	956,068								$	846,789	1,016,293									900,205
Unamortized GAAP adjustments	(6,723		)							—		(9,676		)							—
Indebtedness, net	$	949,345								$	846,789	$	1,006,617								$	900,205

(a) LIBOR rate is determined by individual lenders.

(b) Cross collateralized.

(d) Includes debt subject to interest rate swap ~~locks, established April 4, 2019.~~locks.

(e) ~~Includes $10.5 million of debt subject to interest rate swap locks.~~Cross collateralized.

(f) Cross collateralized.

(g) Includes debt subject to interest rate swap ~~locks.~~locks as of April 1, 2020.

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We are currently in compliance with all covenants on our outstanding indebtedness. In April 2020, we proactively obtained a waiver from the lender for the Premier Retail/Apartments property wherein we will not have to meet the minimum debt service coverage requirement for the period ending June 30, 2020. We also proactively obtained a waiver from the lender for the 249 Central Park, Fountain Plaza Retail, and South Retail properties wherein we will not have to meet the minimum debt service coverage requirement for the periods ending June 30, 2020 and December 31, 2020.

We have contacted our lender for Johns Hopkins Village to discuss potential options in the event that we are not able to meet certain loan covenants in future periods.

As of ~~June 30, 2019,~~March 31, 2020, our principal payments during the following years are as follows ($ in thousands):


Year⁽¹⁾	Year⁽¹⁾	Amount Due		Percentage of Total		Year⁽¹⁾	Amount Due		Percentage of Total
2019 (excluding six months ended June 30, 2019)		$	4,037	1	%
2020		123,994		13	%
2020 (excluding three months ended March 31, 2020)						2020 (excluding three months ended March 31, 2020)	$	7,537	1	%
2021	2021	251,724		26	%	2021	144,980		14	%
2022	2022	319,027		33	%	2022	116,807		11	%
2023	2023	68,010		7	%	2023	149,140		15	%
2024						2024	205,066		20	%
Thereafter	Thereafter	189,276		20	%	Thereafter	392,763		39	%
		$	956,068	100	%

Total						Total	$	1,016,293	100	%

(1) Does not reflect the effect of any maturity extension options.

Interest Rate Derivatives

As of ~~June 30, 2019,~~March 31, 2020, the Company held the following interest rate swap agreements ($ in thousands):


Related Debt	Notional Amount		Index	Swap Fixed Rate		Debt effective rate		Effective Date	Expiration Date	Notional Amount		Index	Swap Fixed Rate		Debt effective rate		Effective Date	Expiration Date
Senior unsecured term loan	$	50,000	1-month LIBOR	2.00	%	3.50	%	3/1/2016	2/20/2020	$	50,000	1-month LIBOR	2.78	%	4.23	%	5/1/2018	5/1/2023
John Hopkins Village										51,566		1-month LIBOR	2.94	%	4.19	%	8/7/2018	8/7/2025
Senior unsecured term loan	50,000		1-month LIBOR	2.78	%	4.28	%	5/1/2018	5/1/2023	10,500		1-month LIBOR	3.02	%	4.47	%	10/12/2018	10/12/2023
John Hopkins Village	52,256		1-month LIBOR	2.94	%	4.19	%	8/7/2018	8/7/2025
Lightfoot Marketplace	10,500		1-month LIBOR	3.02	%	4.77	%	10/12/2018	10/12/2023
249 Central Park Retail, South Retail, and Fountain Plaza Retail	34,570		1-month LIBOR	2.25	%	3.85	%	4/1/2019	8/10/2023	34,228		1-month LIBOR	2.25	%	3.85	%	4/1/2019	8/10/2023
Senior unsecured term loan	50,000		1-month LIBOR	2.26	%	3.76	%	4/1/2019	10/22/2022	50,000		1-month LIBOR	2.26	%	3.71	%	4/1/2019	10/26/2022
Thames Street Wharf										70,000		1-month LIBOR	0.51	%	1.81	%	3/26/2020	6/26/2024
Senior unsecured term loan										25,000		1-month LIBOR	0.50	%	1.95	%	4/1/2020	4/1/2024
Senior unsecured term loan										25,000		1-month LIBOR	0.50	%	1.95	%	4/1/2020	4/1/2024
Senior unsecured term loan										25,000		1-month LIBOR	0.55	%	2.00	%	4/1/2020	4/1/2024
Total	$	247,326								$	341,294

As of ~~June 30, 2019,~~March 31, 2020, we were party to the following LIBOR interest rate cap agreements ($ in thousands):

Effective Date Maturity Date Strike Rate Notional Amount
June 23, 2017 July 1, 2019 1.50 % $ 50,000
September 18, 2017 October 1, 2019 1.50 % 50,000
November 28, 2017 December 1, 2019 1.50 % 50,000
March 7, 2018 April 1, 2020 2.25 % 50,000
July 16, 2018 August 1, 2020 2.50 % 50,000
December 11, 2018 January 1, 2021 2.75 % 50,000
May 15, 2019 June 1, 2022 2.50 % 100,000
Total $ 400,000



Effective Date	Maturity Date	Strike Rate		Notional Amount
3/7/2018	4/1/2020	2.25	%	$	50,000
7/16/2018	8/1/2020	2.50	%	50,000
12/11/2018	1/1/2021	2.75	%	50,000
5/15/2019	6/1/2022	2.50	%	100,000
1/10/2020	2/1/2022	1.75	%	50,000
1/28/2020	2/1/2022	1.75	%	50,000
2/28/2020	3/1/2022	1.50	%	100,000
Total				$	450,000

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Off-Balance Sheet Arrangements

In connection with ~~the~~ our mezzanine lending activities, we have guaranteed payment of portions of certain senior loans of third parties associated with the development projects. The following table summarizes the guarantees we made as of ~~June 30, 2019~~March 31, 2020 (in thousands):


Development project	Payment guarantee amount		Payment guarantee amount
The Residences at Annapolis Junction	$	8,300	$	8,300
Delray Plaza	5,180		5,180
Nexton Square	12,600		12,600
Interlock Commercial(1)	30,654		30,654
Total	$	56,734	$	56,734

Cash Flows


	Six Months Ended June 30,									Three Months Ended March 31,
	2019			2018			Change			2020			2019			Change
	(in thousands)									(in thousands)
Operating Activities	$	28,112		$	11,260		$	16,852		$	20,307		$	16,079		$	4,228
Investing Activities	(246,610		)	(103,118		)	(143,492		)	(49,170		)	(79,803		)	30,633
Financing Activities	220,408			84,360			136,048			38,072			58,632			(20,560		)
Net Increase (decrease)	$	1,910		$	(7,498	)	$	9,408		$	9,209		$	(5,092	)	$	14,301
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period	$	24,051		$	22,916					$	43,579		$	24,051
Cash, Cash Equivalents, and Restricted Cash, End of Period	$	25,961		$	15,418					$	52,788		$	18,959

Net cash provided by operating activities during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 increased ~~$16.9~~$4.2 million compared to the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 primarily as a result of timing differences in operating assets and liabilities as well as increased net operating income from the property portfolio.

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, we invested ~~$143.5~~$30.6 million ~~more~~less in cash compared to the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 due to ~~increased~~decreased development activity and less cash invested in the acquisition ~~activity.~~of operating properties, which was partially offset by more funding of notes receivable.

Net cash provided by financing activities during the ~~six~~three months ended ~~June 30, 2019 increased $136.0~~March 31, 2020 decreased $20.6 million compared to ~~six~~three months ended ~~June 30, 2018,~~March 31, 2019 primarily as a result of the ~~issuance of the Series A Preferred Stock and the loan obtained for Thames Street Wharf.~~decreased net proceeds from equity issuances.

Non-GAAP Financial Measures

We calculate FFO in accordance with the standards established by ~~the National Association of Real Estate Investment Trusts ("Nareit").~~Nareit. Nareit defines FFO as net income (loss) (calculated in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, real estate related depreciation and amortization (excluding amortization of deferred financing costs), impairment of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures.

FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because we believe that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared year-over-year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs.

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However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our

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results from operations, the utility of FFO as a measure of our performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the Nareit definition as we do, and, accordingly, our calculation of FFO may not be comparable to such other REITs’ calculation of FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or service indebtedness. Also, FFO should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.

We also believe that the computation of FFO in accordance with Nareit’s definition includes certain items that are not indicative of the results provided by our operating property portfolio and affect the comparability of our year-over-year performance. Accordingly, management believes that Normalized FFO is a more useful performance measure that excludes certain items, including but not limited to, debt extinguishment losses and prepayment penalties, impairment of intangible assets and liabilities, property acquisition, development and other pursuit costs, mark-to-market adjustments for interest rate derivatives, provision for unrealized credit losses, amortization of right-of-use assets attributable to finance leases, severance related costs, and other non-comparable items.

The following table sets forth a reconciliation of FFO and Normalized FFO for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ to net income, the most directly comparable GAAP measure:


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
	2019		2018		2019		2018			2020		2019
	(in thousands, except per share and unit amounts)									(in thousands, except per share and unit amounts)
Net income attributable to common stockholders and OP Unit holders	$	5,992	$	5,945	$	12,506	$	12,928		$	8,160	$	6,514
Depreciation and amortization⁽¹⁾	13,118		9,179		23,247		18,457			14,092		10,129
FFO attributable to common stockholders and OP Unit holders	$	19,110	$	15,124	$	35,753	$	31,385		22,252		16,643
Acquisition, development and other pursuit costs	57		9		457		93			27		400
Impairment of intangible assets and liabilities	—		98		—		98			158		—
Provision for unrealized credit losses										377		—
Amortization of right-of-use assets - finance leases										147		—
Change in fair value of interest rate derivatives	1,933		11		3,396		(958		)	1,736		1,463
Normalized FFO available to common stockholders and OP Unit holders	$	21,100	$	15,242	$	39,606	$	30,618		$	24,697	$	18,506
Net income attributable to common stockholders and OP Unit holders per diluted share and unit	$	0.08	$	0.09	$	0.18	$	0.21		$	0.11	$	0.10
FFO per diluted share and unit attributable to common stockholders and OP Unit holders	$	0.27	$	0.24	$	0.51	$	0.50		$	0.29	$	0.25
Normalized FFO per diluted share and unit attributable to common stockholders and OP Unit holders	$	0.30	$	0.24	$	0.57	$	0.49		$	0.32	$	0.27
Weighted average common shares and units - diluted	71,232		63,214		69,584		62,878			77,671		67,919

(1) The adjustment for depreciation and amortization for the six months ended June 30, 2019 includes $0.2 million of depreciation attributable to the Company's investment in One City Center from January 1, 2019 to March 14, 2019, which was an unconsolidated real estate investment during this period. Additionally, the adjustment for depreciation and amortization for both the three and six month periods ended June 30, 2019 excludes $0.4 million of depreciation attributable to the Company's joint venture partner at 1405 Point.

(1) The adjustment for depreciation and amortization for the three months ended March 31, 2020 excludes $0.2 million of depreciation attributable to the Company's joint venture partners. The adjustment for depreciation and amortization for the three months ended March 31, 2019 includes $0.2 million of depreciation attributable to the Company's investment in One City Center from January 1, 2019 to March 14, 2019, which was an unconsolidated real estate investment during this period.

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Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements that have been prepared in accordance with GAAP. The preparation of these financial statements requires us to exercise our best judgment in making estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. We evaluate our estimates on an ongoing basis, based upon then-currently available information. Actual results could differ from these estimates. We discuss the accounting policies and estimates that are most critical to understanding our reported financial results in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

~~On February 25,~~In June 2016, the Financial Accounting ~~Standards~~Standard Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses - Measurement of Credit Losses on Financial Instruments (Topic 326). ASU 2016-13 significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance replaces the "incurred loss" approach under previous guidance with an ~~Accounting Standards Update ("ASU") that~~"expected loss" model for instruments measured at amortized cost, such as the Company's notes receivable, construction receivables, and off-balance sheet credit exposures. The amendment requires ~~lessees~~entities to ~~recognize most leases on their balance sheets as lease liabilities with corresponding right-of-~~consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses.

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~~use assets (ASU 2016-02—Leases~~ ~~(Topic 842)). The new standard also makes targeted changes to lessor accounting.~~ We adopted the new standard on January 1, ~~2019,~~2020, using the modified retrospective ~~approach for all leases existing at, or entered into after, the beginning of the earliest comparative period presented as permitted in Accounting Standards Codification ("ASC") Topic 842.~~

~~In addition, we elected the package of practical expedients permitted under the~~ transition guidance within the new standard, which allowed us to not reassess whether any expired or existing contracts are or contain leases, not reassess the lease classification for any expired or existing leases,method and not reassess initial direct costs for existing leases. As of January 1, 2019, we did not have any leases classified as finance leases. We also elected a practical expedient that allowed us to not separate non-lease components from lease components and instead to account for each lease and non-lease component as a single lease component. The adoption of the new standard as of January 1, 2019 did not impact our consolidated results of operations and had no impact on cash flows.

As a lessee we had six ground leases on five properties as of January 1, 2019 with initial terms that range from 20 to 65 years and options to extend up to an additional 70 years in certain cases. The exercise of lease renewal options is at our sole discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term. We recognize lease expense on a straight-line basis over the lease term. Our lease agreements do not contain any residual value guarantees or material restrictive covenants.

The long-term ground leases, represent a majority of our current operating lease payments. We recorded right-of-use assets totaling $32.2 million and lease liabilities totaling $41.4 million upon adopting this standard on January 1, 2019. We utilized a weighted average discount rate of 5.4% to measure our lease liabilities upon adoption.

As a lessor we lease our properties under operating leases and recognize base rents on a straight-line basis over the lease term. We also recognize revenue from tenant recoveries, through which tenants reimburse us on an accrual basis for certain expenses such as utilities, janitorial services, repairs and maintenance, security and alarms, parking lot and ground maintenance, administrative services, management fees, insurance, and real estate taxes. Rental revenues are reduced by the amount of any leasing incentives amortized on a straight-line basis over the term of the applicable lease. In addition, we recognize contingent rental revenue (e.g., percentage rents based on tenant sales thresholds) when the sales thresholds are met. Many tenant leases include one or more options to renew, with renewal terms that can extend the lease term from one to 15 years or more. The exercise of lease renewal options is at the tenant's sole discretion. We include a renewal period in the lease term only if it appears at lease inception that the renewal is reasonably assured.

The new standard includes new considerations regarding the recognition of rental revenue when collection is not probable. We changed our presentation and measurement of charges for uncollectable lease revenue associated with office, retail, and residential leasing activity, reflecting those amounts as a component of rental income on the Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2019. However, in accordance with our prospective adoption of the standard, we did not adjust the prior year period presentation of charges for uncollectable lease revenue associated with its office, retail, and residential leasing activity as a component of operating expenses, excluding property taxes, on the Condensed Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2018. Instead, we recorded a ~~combined~~noncash cumulative effect adjustment to retained earnings of $3.0 million, $2.8 million of which relates to our mezzanine loans and $0.2 million of which relates to ~~the opening balances~~our construction accounts receivable. See Note 6—Notes Receivable and Current Expected Credit Losses, for ~~distributions in excess of earnings and noncontrolling interest relating to receivables where collection of substantially all operating lease payments was not probable as of January 1, 2019.~~

Lease-related receivables, which include contractual amounts accrued and unpaid from tenants and accrued straight-line rents receivable, are reduced for credit losses. Such amounts are recognized as a reduction to real estate rental revenues. We evaluate the collectability of lease receivables using several factors, including a lessee’s creditworthiness. We recognize a credit loss on lease-related receivables when, in the opinion of management, collection of substantially all lease payments is not probable. When collectability is determined not probable, any lease income subsequent to recognizing the credit loss is limited to the lesser of the lease income reflected on a straight-line basis or cash collected.more information.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The primary market risk to which we are exposed is interest rate risk. Our primary interest rate exposure is LIBOR. We primarily use fixed interest rate financing to manage our exposure to fluctuations in interest rates. On a limited basis, we also use derivative financial instruments to manage interest rate risk. We do not use these derivatives for trading or other speculative purposes.

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At ~~June 30, 2019~~March 31, 2020 and excluding unamortized GAAP adjustments, approximately ~~$457.4~~$581.4 million, or ~~47.8%~~57.2%, of our debt had fixed interest rates and approximately ~~$498.7~~$434.9 million, or ~~52.2%~~42.8%, had variable interest rates. At ~~June 30, 2019,~~March 31, 2020, LIBOR was approximately ~~240~~99 basis points. Assuming no increase in the level of our variable rate debt, if LIBOR increased by 100 basis points, our cash flow would decrease by ~~$1.3~~$3.6 million per year as a result of the interest rate caps. Assuming no increase in the level of our variable rate debt, if LIBOR decreased by 100 basis points, our cash flow would increase by ~~$3.6~~$4.3 million per year.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the rules and regulations of the SEC and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

We have carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our disclosure controls and procedures as of ~~June 30, 2019,~~March 31, 2020, the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer have concluded, as of ~~June 30, 2019,~~March 31, 2020, that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports filed or submitted under the Exchange Act: (i) is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

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There have been no changes to our internal control over financial reporting during the quarter ended ~~June 30, 2019~~March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

We are not currently a party, as plaintiff or defendant, to any legal proceedings that we believe to be material or which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition, or results of operations if determined adversely to us. We may be subject to ongoing litigation relating to our portfolio and the properties comprising our portfolio, and we expect to otherwise be party from time to time to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of our business.

Item 1A. Risk Factors

Except as set forth below, there have been no material changes from the risk factors disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~

~~Risks Related to Our Series A Preferred Stock~~2019.

~~Our Series A Preferred Stock is subordinate~~The ongoing COVID-19 pandemic and measures intended to ~~our existing and future debt, and the interests of holders of our Series A Preferred Stock could be diluted by the issuance of additional shares of preferred stock and by other transactions.~~

Our Series A Preferred Stock ranks junior to all of our existing and future indebtedness, any classes and series of our capital stock expressly designated as ranking senior to our Series A Preferred Stock as to distribution rights and rights upon our liquidation, dissolution or winding up, and other non-equity claims on us and our assets available to satisfy claims against us, including claims in bankruptcy, liquidation or similar proceedings. Our existing debt includes restrictions on our ability to pay dividends to preferred stockholders, and our other existing or future debt may include similar restrictions. Subject to limitations prescribed by Maryland law and our charter, our Board of Directors is authorized to issue, from our authorized but unissued shares of capital stock, preferred stock in such classes or series as our Board of Directors may determine and to establish from time to time the number of shares of preferred stock to be included in any such class or series. The issuance of additional shares of Series A Preferred Stock or additional shares of capital stock ranking on parity with our Series A Preferred Stock would dilute the interests of the holders of our Series A Preferred Stock, and the issuance of shares of any class or series of our capital stock expressly designated as ranking senior to our Series A Preferred Stock as to distribution rights and rights upon our liquidation, dissolution or winding up or the incurrence of additional indebtedness could adversely affect our ability to pay dividends on, redeem or pay the liquidation preference on our Series A Preferred Stock. Other than the conversion right afforded to holders of our Series A Preferred Stock that may become exercisable in connection with a change of control (as defined in the articles supplementary designating the terms of our Series A Preferred Stock), none of the provisions relating to our Series A Preferred Stock contain any terms relating to or limiting our indebtedness or affording the holders of our Series A Preferred Stock protection in the event of a highly leveraged or other transaction, including a merger or the sale, lease or conveyance of all or substantially all our assets, that might adversely affect the holders of our Series A Preferred Stock, so long as the rights of the holders of our Series A Preferred Stock are not materially and adversely affected.

~~Our Series A Preferred Stock has not been rated.~~

We have not sought to obtain a rating for our Series A Preferred Stock. No assurance can be given, however, that one or more rating agencies might not independently determine to issue such a rating or that such a rating, if issued, would not adversely affect the market price of our Series A Preferred Stock. In addition, we may elect in the future to obtain a rating of our Series A Preferred Stock, which could adversely impact the market price of our Series A Preferred Stock. Ratings only reflect the views of the rating agency or agencies issuing the ratings and such ratings could be revised downward or withdrawn entirely at the discretion of the issuing rating agency if inprevent its ~~judgment circumstances so warrant. Any such downward revision or withdrawal of a rating~~spread could have a material adverse effect on ~~the market price~~our business, results of ~~our Series A Preferred Stock.~~operations, cash flows and financial condition.

~~Holders of our Series A Preferred Stock have extremely limited voting rights.~~

~~Our common stock is~~Since being first reported in December 2019, COVID-19 has spread globally, including to every state in the ~~only class of our securities that carry full voting rights. Voting rights for holders of our Series A Preferred Stock exist primarily~~United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The pandemic has led governments and other authorities around the ~~ability~~world, including federal, state and local authorities in the United States, to ~~elect, together with holders~~impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. All of our ~~capital stock ranking~~properties and our headquarters are located in areas that are or have been subject to shelter-in-place orders and restrictions on ~~parity with our Series A Preferred Stock~~the types of businesses that may continue to operate.

The impact of the COVID-19 pandemic and ~~having similar voting rights, two additional directors~~measures to our Board of Directors in the event that six quarterly dividends (whether or not consecutive) payable on our Series A Preferred Stock are in arrears, and with respect to voting on amendments to our charter or articles supplementary relating to our Series A Preferred Stock thatprevent its spread could materially and adversely affect our businesses in a number of ways. Our rental revenue and operating results depend significantly on the ~~rights~~occupancy levels at our properties and the ability of our tenants to meet their rent and other obligations to us. The government-imposed measures in response to the pandemic, coupled with customers reducing their purchasing activity in light of health concerns or personal financial distress, have resulted in significant disruptions to retail businesses around the country, including in the markets in which we own retail assets, which has resulted, and could continue to result in, tenants being unwilling or unable to pay rent in full on a timely basis or at all. For example, as of April 24, 2020, we had collected 57% of April rent from our retail tenants and agreed to defer 43% of April rent from our retail tenants. If the impacts of the ~~holders~~pandemic continue for an extended period of time, we expect that certain office tenants and multifamily residents will experience greater financial distress, which could result in late payments, requests for rental relief, business closures, decreases in occupancy, reductions in rent, or increases in rent concessions or other accommodations, as applicable. In some cases, we may have to restructure tenants’ long-term rent obligations and may not be able to do so on terms that are as favorable to us as those currently in place. Certain of our ~~Series A Preferred Stock~~office and retail tenants also may incur significant costs or ~~create additional classes~~losses responding to the COVID-19 pandemic, lose business due to any interruption in the operations of our properties or ~~series~~incur other losses or liabilities related to shelter-in-place orders, quarantines, infection or other related factors. In addition, numerous state, local, federal and industry-initiated efforts may affect our ability to collect rent or enforce remedies for the failure to pay rent, particularly with respect to our multifamily properties. Our development and construction projects also could be adversely affected, including as a result of disruptions in supply chains and government restrictions on the types of projects that may continue during the pandemic. Additionally, borrowers under our mezzanine loan program may be unable to satisfy their obligations to us as a result of the deterioration of their businesses as a result of the pandemic. In addition, a significant number of our retail tenants have been forced to close temporarily or operate on a limited basis as a result of COVID-19 and related government actions, which could result in delays in rent payments, rent concessions, early lease terminations or tenant bankruptcies. For example, as of April 24, 2020, based on a percentage of April rent that was due, 34% of our retail tenants were open, 27% were operating on a limited basis, and 39% were closed.

Further, our management team is focused on mitigating the impacts of COVID-19, which has required and will continue to require, a large investment of time and resources across our business. Additionally, many of our employees are currently working remotely. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business.

The COVID-19 pandemic has also caused, and is likely to continue to cause, severe economic, market and other disruptions worldwide. We may be impacted by stock market volatility and illiquid market conditions, global economic uncertainty, and the perceived prospect for capital appreciation in real estate. We cannot assure you that conditions in the bank lending, capital and other financial markets will not continue to deteriorate as a result of the pandemic, or that our access to

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~~our~~ capital ~~stock expressly designated as ranking senior to our Series A Preferred Stock as to distribution rights~~ and ~~rights upon our liquidation, dissolution or winding up. Other than as described above~~other sources of funding will not become constrained, which could adversely affect the availability and ~~as set forth in more detail in the articles supplementary designating the~~ terms of future borrowings, renewals or refinancings. In addition, the deterioration of global economic conditions as a result of the pandemic may ultimately decrease occupancy levels and rents across our ~~Series A Preferred Stock, holders~~portfolio as tenants and residents reduce or defer their spending, which could adversely affect the value of our ~~Series A Preferred Stock will not have any voting rights.~~properties.

~~Our cash available for dividends may not be sufficient to pay dividends~~The extent of the COVID-19 pandemic’s effect on our ~~Series A Preferred Stock~~operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic and the duration of government measures to mitigate the pandemic, all of which are uncertain and difficult to predict. Due to the speed with which the situation is developing, we are not able at ~~expected levels,~~this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and ~~we cannot assure you~~cash flows could be material.

Changes to the U.S. federal income tax laws, including the enactment of certain tax reform measures, could have an adverse impact on our ~~ability~~business and financial results.

In recent years, numerous legislative, judicial and administrative changes have been made to ~~pay dividends~~the U.S. federal income tax laws applicable to investments in real estate and REITs, including the passage of the Tax Cuts and Jobs Act of 2017. Federal legislation intended to ameliorate the economic impact of the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act, has been enacted that makes technical corrections to, or modifies on a temporary basis, certain of the provisions of the Tax Cut and Jobs Act of 2017, and it is possible that additional such legislation may be enacted in the future. Section 2303(b) of the CARES Act amended the Internal Revenue Code section 172(b)(1) to provide for a carryback of any net operating loss (NOL) arising in a taxable year beginning after December 31, 2017 and before January 1, 2021 (carryback years) to each of the five taxable years preceding the taxable year in which the loss arises (carryback period). We ~~may use borrowed funds or funds from other sources~~plan to ~~pay dividends, which may materially and adversely impact~~avail ourselves of this provision for any NOLs incurred by our ~~operations.~~Taxable REIT Subsidiary during the carryback years to claim any tax refunds available in the carryback period.

~~We intend to pay regular quarterly dividends to holders~~The full impact of ~~our Series A Preferred Stock. Dividends declared by us will~~the Tax Cuts and Jobs Act of 2017 and the CARES Act may not become evident for some period of time. In addition, there can be authorized by our Board of Directors in its sole discretion out of assets legally available for distribution and will depend upon a number of factors, including our earnings, our financial condition, the requirements for qualification as a REIT, restrictions under applicable law, our need to comply with the terms of our existing financing arrangements, the capital requirements of our company and other factors as our Board of Directors may deem relevant from time to time. We may be required to fund dividends from working capital, borrowings under our revolving credit facility, proceeds from offerings of securities or a sale of assetsno assurance that future changes to the extent distributions exceed earnings or cash flows from operations. Funding dividends from working capital would restrict our operations. If we borrow from our revolving credit facility in order to pay dividends, we would be more limited in our ability to execute our strategy of using that revolving credit facility to fund acquisitions or capital improvements. If we are required to sell assets to fund dividends, such asset sales may occur at a time or in a manner that is not consistent with our disposition strategy. If we borrow to fund dividends, our leverage ratios and future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been. We may not be able to pay dividends in the future. In addition, some of our distributions may be considered a return of capital for income tax purposes. If we decide to make distributions in excess of our current and accumulated earnings and profits, such distributions would generally be considered a return of capital forU.S. federal income tax purposes to the extent of the holder’s adjusted tax basis in their shares. A return of capital is not taxable, but it has the effect of reducing the holder's adjusted tax basis in its investment. If distributions exceed the adjusted tax basis of a holder’s shares, theylaws or regulatory changes will ~~be treated as gain from the sale or exchange of such stock.~~

~~Holders of our Series A Preferred Stock may~~ not be ~~permitted to exercise conversion rights upon a change of control. If exercisable,~~proposed or enacted that could impact our business and financial results. The REIT rules are constantly under review by persons involved in the ~~change of control conversion feature of our Series A Preferred Stock may not adequately compensate preferred stockholders,~~legislative process and by the Internal Revenue Service and the ~~change of control conversion and redemption features of our Series A Preferred Stock may make it more difficult for a party to take over our company or discourage a party from taking over our company~~

Upon the occurrence of a change of control (as defined in the articles supplementary designating the terms of our Series A Preferred Stock), holders of our Series A Preferred Stock will have the right to convert some or all of their Series A Preferred Stock into shares of our common stock (or equivalent value of alternative consideration). Notwithstanding that we generally may not redeem our Series A Preferred Stock prior to June 18, 2024, we have a special optional redemption right to redeem our Series A Preferred Stock in the event of a change of control, and holders of our Series A Preferred Stock will not have the right to convert any shares of our Series A Preferred Stock that we have elected to redeem prior to the change of control conversion date. Upon such a conversion, the holders will be limited to a maximum number of shares of our common stock equal to the 2.97796 (i.e. the "Share Cap"), subject to certain adjustments, multiplied by the number of our Series A Preferred Stock converted. If the Common Stock Price (as defined in the articles supplementary designating the terms of our Series A Preferred Stock) is less than $8.395 (which is approximately 50% of the per-share closing sale price of our common stock on June 10, 2019), subject to adjustment, each holder will receive a maximum of 2.97796 shares of our common stock per share of our Series A Preferred Stock,U.S. Treasury Department, which may result in ~~a holder receiving value that is less than~~revisions to regulations and interpretations in addition to statutory changes. If enacted, certain of such changes could have an adverse impact on our business and financial results.

We cannot predict whether, when, or to what extent any new U.S. federal tax laws, regulations, interpretations, or rulings will impact the ~~liquidation preference of our Series A Preferred Stock. In addition, those features of our Series A Preferred Stock may have~~real estate investment industry or REITs. Prospective investors are urged to consult their tax advisors regarding the effect of ~~inhibiting a third party from making~~potential future changes to the federal tax laws on an ~~acquisition proposal for~~investment in our company or of delaying, deferring or preventing a change of control of our company under circumstances that otherwise could provide the holders of our common stock and Series A Preferred Stock with the opportunity to realize a premium over the then-current market price or that stockholders may otherwise believe is in their best interests.shares.

~~Listing on the NYSE does not guarantee that a market for our Series A Preferred Stock will be maintained.~~

There is no guarantee our Series A Preferred Stock will remain listed on the NYSE or any other nationally recognized exchange. If our Series A Preferred Stock is delisted from the NYSE or another nationally recognized exchange, we could face significant material adverse consequences, including:

~~a limited availability of market quotations for our Series A Preferred Stock;~~

~~reduced liquidity with respect to our Series A Preferred Stock;~~

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a determination that our Series A Preferred Stock is “penny stock,” which will require brokers trading in our Series A Preferred Stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our Series A Preferred Stock; and

~~a decreased ability to issue additional securities or obtain additional financing in the future.~~

Moreover, an active trading market on the NYSE for our Series A Preferred Stock may not develop or, if it does develop, may not be sustained, in which case the market price of our Series A Preferred Stock could be materially and adversely affected.

~~The market price and trading volume of our Series A Preferred Stock may fluctuate significantly and be volatile due to numerous circumstances beyond our control.~~

If an active trading market does develop for our Series A Preferred Stock on the NYSE, our Series A Preferred Stock may trade at prices lower than the price of which holders of our Series A Preferred Stock purchased such shares, and the market price of our Series A Preferred Stock would depend on many factors, including, but not limited to:

~~prevailing interest rates;~~

~~the market for similar securities;~~

~~general economic and financial market conditions;~~

~~our issuance, as well as the issuance by our subsidiaries, of additional preferred equity or debt securities; and~~

~~our financial condition, cash flows, liquidity, results of operations, funds from operations and prospects.~~

The trading prices of common and preferred equity securities issued by REITs and other real estate companies historically have been affected by changes in market interest rates. One of the factors that may influence the market price of our Series A Preferred Stock is the annual yield from distributions on our Series A Preferred Stock as compared to yields on other financial instruments. An increase in market interest rates may lead holders of our Series A Preferred Stock to demand a higher annual yield and to sell shares of our Series A Preferred Stock, which could reduce the market price of our Series A Preferred Stock.

Future offerings of debt securities or shares of our capital stock expressly designated as ranking senior to our Series A Preferred Stock as to distribution rights and rights upon our liquidation, dissolution or winding up may adversely affect the market price of our Series A Preferred Stock.

If we decide to issue debt securities or shares of our capital stock expressly designated as ranking senior to our Series A Preferred Stock as to distribution rights and rights upon our liquidation, dissolution or winding up in the future, it is possible that these securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, any convertible or exchangeable debt securities that we issue in the future may have rights, preferences and privileges more favorable than those of our Series A Preferred Stock and may result in dilution to owners of our Series A Preferred Stock. We and, indirectly, our stockholders, will bear the cost of issuing and servicing such securities. Because our decision to issue debt securities or shares of our capital stock expressly designated as ranking senior to our Series A Preferred Stock as to distribution rights and rights upon our liquidation, dissolution or winding up in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Accordingly, holders of our Series A Preferred Stock will bear the risk of our future offerings reducing the market price of our Series A Preferred Stock and diluting the value of their share holdings in us.

~~The phase-out of LIBOR and transition to SOFR as a benchmark interest rate could have adverse effects.~~

The interest rate on our variable rate debt is based on LIBOR. In 2018, the Alternative Reference Rate Committee identified the Secured Overnight Financing Rate (“SOFR”) as the alternative to LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities, published by the Federal Reserve Bank of New York. By the end of 2021, it is expected that no new contracts will reference LIBOR and will instead use SOFR. Due to the broad use of LIBOR as a reference rate, all financial market participants, including us, are impacted by the risks associated with this transition and, therefore, it could adversely affect our operations and cash flows.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Issuer Purchases of Equity Securities

~~None.~~During the three months ended March 31, 2020, certain of our employees surrendered shares of common stock owned by them to satisfy their minimum statutory federal and state tax obligations associated with the vesting of restricted shares of common stock issued under our Amended and Restated 2013 Equity Incentive Plan (the "Amended Plan"). The following table summarizes all of these repurchases during the three months ended March 31, 2020.

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Period	Total Number of Shares Purchased⁽¹⁾	Average Price Paid for Shares⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
January 1, 2020 through January 31, 2020	—	$	—	N/A	N/A
February 1, 2020 through February 29, 2020	—	—		N/A	N/A
March 1, 2020 through March 31, 2020	27,060	17.30		N/A	N/A
Total	27,060	$	17.30


(1)	The number of shares purchased represents shares of common stock surrendered by certain of our employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted shares of common stock issued under the Amended Plan. With respect to these shares, the price paid per share is based on the fair value at the time of surrender.

Item 3. Defaults on Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

The exhibits listed in the accompanying Exhibit Index are filed, furnished or incorporated by reference (as applicable) as part of this Quarterly Report on Form 10-Q.



Exhibit No.		Description
3.1		Articles of Amendment and Restatement of Armada Hoffler Properties, Inc. (Incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3, filed on June 2, 2014)

3.2		Amended and Restated Bylaws of Armada Hoffler Properties, Inc. (Incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed on February 23, 2018)

3.3		Articles Supplementary Designating the Rights and Preferences of the 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 17, 2019).

~~10.1~~3.4		~~Amendment No. 3~~Articles Supplementary relating to ~~the First Amended and Restated Agreement of Limited Partnership~~Section 3-802(c) of the ~~Operating Partnership.~~Maryland General Corporation Law (Incorporated by reference to Exhibit ~~10.1~~3.1 to the Company’s Current Report on Form 8-K, filed on ~~June 17, 2019)~~February 24, 2020).

10.2*		~~Purchase and Sale Agreement and Escrow Instructions dated June 7, 2019, by and between EOSII AT Thames Street Wharf, LLC and 1300 Thames Street Office, LLC.~~

10.3*		~~First Amended Purchase and Sale Agreement and Escrow Instructions dated June 7, 2019, by and between EOSII AT Thames Street Wharf, LLC and 1300 Thames Street Office, LLC.~~

10.4*		~~Second Amended Purchase and Sale Agreement and Escrow Instructions dated June 10, 2019, by and between EOSII AT Thames Street Wharf, LLC and 1300 Thames Street Office, LLC.~~

10.5*		~~Third Amended Purchase and Sale Agreement and Escrow Instructions dated June 29, 2019, by and between EOSII AT Thames Street Wharf, LLC and 1300 Thames Street Office, LLC.~~

31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101*		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2019,~~March 31, 2020, were formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheet, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Statements of Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

104*		Cover page ~~formatted in~~Interactive Data File - the cover page XBRL tags are embedded within the Inline ~~XBRL~~XBRL.

*		Filed herewith

**		Furnished herewith

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




	ARMADA HOFFLER PROPERTIES, INC.

Date: ~~August~~May 5, ~~2019~~2020	/s/ Louis S. Haddad
	Louis S. Haddad
	President and Chief Executive Officer
	(Principal Executive Officer)

Date: ~~August~~May 5, ~~2019~~2020	/s/ Michael P. O’Hara
	Michael P. O’Hara
	Chief Financial Officer, Treasurer and Secretary
	(Principal Accounting and Financial Officer)

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	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
	(Unaudited)
Operating lease cost	$	707	1,395
Finance lease cost:
Amortization of right-of-use assets	$	77	77
Interest on lease liabilities	$	112	112



Year Ending December 31,	Operating Leases			Finance Leases
2019 (excluding six months ended June 30, 2019)	$	954		$	422
2020	2,080			864
2021	2,137			864
2022	2,361			868
2023	2,400			873
Thereafter	105,961			43,902
Total lease liabilities	115,893			47,793
Less imputed interest	(74,593		)	(29,931		)
Present value of lease liabilities	$	41,300		$	17,862



	Wendover Village additional outparcel		One City Center		1405 Point				Red Mill Commons			Marketplace at Hilltop				Thames Street Wharf
Land	$	1,633	$	2,678	$	—		(a)	$	44,252		$	2,023		(b)	$	15,861
Site improvements	50		163		298				2,558			691				150
Building and improvements	888		28,039		92,866				27,790			19,195				64,539
Furniture and fixtures	—		—		2,302				—			—				—
In-place leases	101		15,140		3,371				9,973			4,565				24,385
Above-market leases	111		—		—				1,463			599				—
Below-market leases	—		—		—				(6,221		)	(1,136		)		(3,636		)
Finance lease liabilities	—		—		(8,671		)		—			(9,200		)		—
Finance lease right-of-use assets	—		—		11,730				—			12,770				—
Net assets acquired	$	2,783	$	46,020	$	101,896			$	79,815		$	29,507			$	101,299



Loan name	Note balance at assumption		Fair value of loan at assumption		Loan maturity date	Loan interest rate
Redmill North	$	4,451	$	4,520	12/31/2028	4.73	%
Redmill South	6,310		6,090		5/1/2025	3.57	%
Redmill Central	2,640		2,690		6/17/2024	4.80	%
Redmill West	11,548		11,540		6/1/2022	4.23	%
Marketplace at Hilltop	10,740		10,790		10/1/2022	4.42	%
	$	35,689	$	35,630