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)

(Registrant’s telephone number, including area code)

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~~	☐		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).

As of November ~~3, 2020,~~2, 2021, the registrant had ~~57,934,042~~61,505,432 shares of common stock, $0.01 par value per share, outstanding. In addition, as of November ~~3, 2020,~~2, 2021, Armada Hoffler, L.P., the registrant's operating partnership subsidiary, had ~~20,865,485~~20,633,485 units of limited partnership interest ("OP Units") outstanding (other than OP Units held by the registrant).

(In thousands, except par value and share data)


	September 30, 2021		December 31, 2020
	(Unaudited)
ASSETS
Real estate investments:
Income producing property	$	1,744,124	$	1,680,943
Held for development	11,294		13,607
Construction in progress	54,871		63,367
	1,810,289		1,757,917
Accumulated depreciation	(278,218)		(253,965)
Net real estate investments	1,532,071		1,503,952
Real estate investments held for sale	68,762		1,165
Cash and cash equivalents	28,038		40,998
Restricted cash	5,415		9,432
Accounts receivable, net	30,576		28,259
Notes receivable, net	118,164		135,432
Construction receivables, including retentions, net	13,753		38,735
Construction contract costs and estimated earnings in excess of billings	370		138
Equity method investment	9,174		1,078
Operating lease right-of-use assets	23,547		32,760
Finance lease right-of-use assets	47,266		23,544
Acquired lease intangible assets	65,197		58,154
Other assets	42,051		43,324
Total Assets	$	1,984,384	$	1,916,971
LIABILITIES AND EQUITY
Indebtedness, net	$	968,424	$	963,845
Liabilities related to assets held for sale	60,021		—
Accounts payable and accrued liabilities	26,549		23,900
Construction payables, including retentions	22,078		49,821
Billings in excess of construction contract costs and estimated earnings	2,674		6,088
Operating lease liabilities	31,607		41,659
Finance lease liabilities	46,078		17,954
Other liabilities	62,197		56,902
Total Liabilities	1,219,628		1,160,169



Stockholders’ equity:
Preferred stock, $0.01 par value, 100,000,000 shares authorized: 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, 9,980,000 shares authorized, 6,843,418 shares issued and outstanding as of September 30, 2021 and December 31, 2020	171,085		171,085
Common stock, $0.01 par value, 500,000,000 shares authorized; 61,324,232 and 59,073,220 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	613		591
Additional paid-in capital	500,889		472,747
Distributions in excess of earnings	(130,904)		(112,356)
Accumulated other comprehensive loss	(5,420)		(8,868)
Total stockholders’ equity	536,263		523,199
Noncontrolling interests in investment entities	634		488
Noncontrolling interests in Operating Partnership	227,859		233,115
Total Equity	764,756		756,802
Total Liabilities and Equity	$	1,984,384	$	1,916,971

Preferred stock, $0.01 par value, 100,000,000 shares authorized:
6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, 9,980,000 and 2,930,000

shares authorized as of September 30, 2020 and December 31, 2019, respectively, 6,843,418

and 2,530,000 shares issued and outstanding as of September 30, 2020 and December 31,

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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues
Rental revenues	$	49,560	$	39,636	$	142,679	$	121,840
General contracting and real estate services revenues	17,502		58,617		71,473		163,283
Total revenues	67,062		98,253		214,152		285,123

Expenses
Rental expenses	12,717		10,223		34,841		27,907
Real estate taxes	5,543		4,760		16,314		13,326
General contracting and real estate services expenses	15,944		56,509		68,350		157,401
Depreciation and amortization	16,886		14,176		52,237		42,232
Amortization of right-of-use assets - finance leases	278		147		745		440
General and administrative expenses	3,449		2,601		10,957		9,382
Acquisition, development and other pursuit costs	8		26		111		555
Impairment charges	—		47		3,122		205
Total expenses	54,825		88,489		186,677		251,448
Gain (loss) on real estate dispositions, net	(113)		3,612		3,604		6,388
Operating income	12,124		13,376		31,079		40,063
Interest income	3,766		4,417		14,628		16,055
Interest expense	(8,827)		(7,523)		(25,220)		(22,938)

Change in fair value of derivatives and other	131		318		838		(1,424)
Unrealized credit loss release (provision)	617		33		284		(227)
Other income (expense), net	(105)		177		81		521
Income before taxes	7,706		10,798		21,690		32,050
Income tax benefit	42		28		522		220
Net income	7,748		10,826		22,212		32,270
Net (income) loss attributable to noncontrolling interests:
Investment entities	—		45		—		181
Operating Partnership	(1,237)		(2,262)		(3,477)		(7,548)
Net income attributable to Armada Hoffler Properties, Inc.	6,511		8,609		18,735		24,903
Preferred stock dividends	(2,887)		(2,220)		(8,661)		(4,462)
Net income attributable to common stockholders	$	3,624	$	6,389	$	10,074	$	20,441
Net income attributable to common stockholders per share (basic and diluted)	$	0.06	$	0.11	$	0.17	$	0.36
Weighted-average common shares outstanding (basic and diluted)	61,083		57,923		60,310		57,000




Comprehensive income:
Net income	$	7,748	$	10,826	$	22,212	$	32,270
Unrealized cash flow hedge gains (losses)	(460)		(118)		1,347		(9,886)
Realized cash flow hedge losses reclassified to net income	1,123		1,070		3,304		2,260
Comprehensive income	8,411		11,778		26,863		24,644
Comprehensive (income) loss attributable to noncontrolling interests:
Investment entities	—		45		—		181
Operating Partnership	(1,406)		(2,512)		(4,680)		(5,449)
Comprehensive income attributable to Armada Hoffler Properties, Inc.	$	7,005	$	9,311	$	22,183	$	19,376

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Revenues
Rental revenues $ 39,636
$ 42,220
$ 121,840
$ 109,507
General contracting and real estate services revenues 58,617
27,638
163,283
66,118
Total revenues 98,253
69,858
285,123
175,625
Expenses
Rental expenses 10,223
9,873
27,907
24,513
Real estate taxes 4,760
4,180
13,326
10,759
General contracting and real estate services expenses 56,509
26,446
157,401
62,855
Depreciation and amortization 14,176
15,465
42,232
38,874
Amortization of right-of-use assets - finance leases 147
145
440
230
General and administrative expenses 2,601
2,977
9,382
9,329
Acquisition, development and other pursuit costs 26
93
555
550
Impairment charges 47
0
205
0
Total expenses 88,489
59,179
251,448
147,110
Gain on real estate dispositions 3,612
4,699
6,388
4,699
Operating income 13,376
15,378
40,063
33,214
Interest income 4,417
5,710
16,055
16,622
Interest expense on indebtedness (7,294 ) (8,828 ) (22,252 ) (22,205 )
Interest expense on finance leases (229 ) (228 ) (686 ) (340 )
Equity in income of unconsolidated real estate entities 0
0
0
273
Change in fair value of derivatives and other 318
(530 ) (1,424 ) (3,926 )
Unrealized credit loss release (provision) 33
0
(227 ) 0
Other income (expense), net 177
362
521
426
Income before taxes 10,798
11,864
32,050
24,064
Income tax benefit 28
199
220
339
Net income 10,826
12,063
32,270
24,403
Net (income) loss attributable to noncontrolling interests:
Investment entities 45
(960 ) 181
(640 )
Operating Partnership (2,262 ) (2,790 ) (7,548 ) (6,000 )
Net income attributable to Armada Hoffler Properties, Inc. 8,609
8,313
24,903
17,763
Preferred stock dividends (2,220 ) (1,234 ) (4,462 ) (1,388 )
Net income attributable to common stockholders $ 6,389
$ 7,079
$ 20,441
$ 16,375
Net income attributable to common stockholders per share (basic and diluted) $ 0.11
$ 0.13
$ 0.36
$ 0.31
Weighted-average common shares outstanding (basic and diluted) 57,923
53,463
57,000
52,289

Comprehensive income:

Net income $ 10,826
$ 12,063
$ 32,270
$ 24,403
Unrealized cash flow hedge losses (118 ) (1,247 ) (9,886 ) (5,709 )
Realized cash flow hedge losses reclassified to net income 1,070
123
2,260
230
Comprehensive income 11,778
10,939
24,644
18,924
Comprehensive (income) loss attributable to noncontrolling interests:
Investment entities 45
(960 ) 181
(640 )
Operating Partnership (2,512 ) (2,473 ) (5,449 ) (4,547 )
Comprehensive income attributable to Armada Hoffler Properties, Inc. $ 9,311
$ 7,506
$ 19,376
$ 13,737

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
Balance, December 31, 2020	$	171,085	$	591	$	472,747	$	(112,356)	$	(8,868)	$	523,199	$	488	$	233,115	$	756,802

Net income	—		—		—		5,198		—		5,198		—		811		6,009
Unrealized cash flow hedge gains	—		—		—		—		1,685		1,685		—		591		2,276
Realized cash flow hedge losses reclassified to net income	—		—		—		—		798		798		—		280		1,078
Net proceeds from issuance of common stock	—		7		8,974		—		—		8,981		—		—		8,981
Restricted stock awards, net	—		1		631		—		—		632		—		—		632

Redemption of operating partnership units	—		—		131		—		—		131		—		(134)		(3)
Dividends declared on preferred stock	—		—		—		(2,887)		—		(2,887)		—		—		(2,887)
Dividends and distributions declared on common shares and units ($0.15 per share and unit)	—		—		—		(9,008)		—		(9,008)		—		(3,128)		(12,136)
Balance, March 31, 2021	171,085		599		482,483		(119,053)		(6,385)		528,729		488		231,535		760,752
Net income	—		—		—		7,026		—		7,026		—		1,429		8,455
Unrealized cash flow hedge losses	—		—		—		—		(349)		(349)		—		(120)		(469)
Realized cash flow hedge losses reclassified to net income	—		—		—		—		820		820		—		283		1,103

Net proceeds from issuance of common stock	—		11		14,105		—		—		14,116		—		—		14,116
Restricted stock awards, net	—		—		473		—		—		473		—		—		473

Acquisition of noncontrolling interest in real estate entity	—		—		(950)		—		—		(950)		146		—		(804)


Dividends declared on preferred stock	—		—		—		(2,887)		—		(2,887)		—		—		(2,887)
Dividends and distributions declared on common shares and units ($0.16 per share and unit)	—		—		—		(9,783)		—		(9,783)		—		(3,337)		(13,120)
Balance, June 30, 2021	171,085		610		496,111		(124,697)		(5,914)		537,195		634		229,790		767,619
Net income	—		—		—		6,511		—		6,511		—		1,237		7,748
Unrealized cash flow hedge losses	—		—		—		—		(343)		(343)		—		(117)		(460)
Realized cash flow hedge losses reclassified to net income	—		—		—		—		837		837		—		286		1,123

Net proceeds from issuance of common stock	—		3		4,328		—		—		4,331		—		—		4,331
Restricted stock awards, net	—		—		450		—		—		450		—		—		450



Dividends declared on preferred stock	—		—		—		(2,887)		—		(2,887)		—		—		(2,887)
Dividends and distributions declared on common shares and units ($0.16 per share and unit)	—		—		—		(9,831)		—		(9,831)		—		(3,337)		(13,168)
Balance, September 30, 2021	$	171,085	$	613	$	500,889	$	(130,904)	$	(5,420)	$	536,263	$	634	$	227,859	$	764,756

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, 2019 $ 63,250
$ 563
$ 455,680
$ (106,676 ) $ (4,240 ) $ 408,577
$ 4,462
$ 242,408
$ 655,447
Cumulative effect of accounting change⁽¹⁾
—
—
—
(2,185 ) —
(2,185 ) —
(824 ) (3,009 )
Net income (loss) —
—
—
6,992
—
6,992
(92 ) 2,235
9,135
Unrealized cash flow hedge losses —
—
—
—
(5,438 ) (5,438 ) —
(2,051 ) (7,489 )
Realized cash flow hedge losses reclassified to net income —
—
—
—
285
285
—
107
392
Net proceeds from issuance of common stock —
1
1,348
—
—
1,349
—
—
1,349
Restricted stock awards, net of tax withholding —
1
782
—
—
783
—
—
783
Restricted stock award forfeitures —
—
(6 ) —
—
(6 ) —
—
(6 )
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
Net income (loss) —
—
—
9,302
—
9,302
(44 ) 3,051
12,309
Unrealized cash flow hedge losses —
—
—
—
(1,657 ) (1,657 ) —
(622 ) (2,279 )
Realized cash flow hedge losses reclassified to net income —
—
—
—
580
580
—
218
798
Net proceeds from issuance of cumulative redeemable perpetual preferred stock 96
—
(5 ) —
—
91
—
—
91
Net proceeds from issuance of common stock —
5
4,411
—
—
4,416
—
—
4,416
Restricted stock awards, net of tax withholding —
—
516
—
—
516
—
—
516
Restricted stock award forfeitures —
—
(1 ) —
—
(1 ) —
—
(1 )
Acquisition of noncontrolling interest in real estate entity —
—
(2,386 ) —
—
(2,386 ) (3,744 ) —
(6,130 )
Dividends declared on preferred stock —
—
—
(1,175 ) —
(1,175 ) —
—
(1,175 )
Balance, June 30, 2020 63,346
570
460,339
(107,263 ) (10,470 ) 406,522
582
239,842
646,946
Net income —
—
—
8,609
—
8,609
(45 ) 2,262
10,826
Unrealized cash flow hedge losses —
—
—
—
(87 ) (87 ) —
(31 ) (118 )
Realized cash flow hedge losses reclassified to net income —
—
—
—
790
790
—
280
1,070

Cumulative effect of accounting change(1)

~~(2) The Company recorded cumulative effect adjustments related to the new lease standard in the first quarter of 2019.~~

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)(Unaudited)


	Nine Months Ended September 30,
	2021		2020
OPERATING ACTIVITIES
Net income	$	22,212	$	32,270
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of buildings and tenant improvements	38,521		31,565
Amortization of leasing costs, in-place lease intangibles and below market ground rents - operating leases	13,716		10,667
Accrued straight-line rental revenue	(4,209)		(3,434)
Amortization of leasing incentives and above or below-market rents	(794)		(593)
Amortization of right-of-use assets - finance leases	745		440
Accrued straight-line ground rent expense	157		54
Unrealized credit loss provision (release)	(284)		227
Adjustment for uncollectable lease accounts	683		3,195
Noncash stock compensation	1,830		1,907
Impairment charges	3,122		205
Noncash interest expense	2,178		1,499

Gain on real estate dispositions, net	(3,604)		(6,388)

Change in fair value of derivatives and other	(838)		1,424

Changes in operating assets and liabilities:
Property assets	(1,303)		(6,642)
Property liabilities	4,555		4,042
Construction assets	25,329		(8,328)
Construction liabilities	(34,181)		18,824
Interest receivable	1,387		(13,167)
Net cash provided by operating activities	69,222		67,767
INVESTING ACTIVITIES
Development of real estate investments	(38,659)		(52,157)
Tenant and building improvements	(6,621)		(8,195)
Acquisitions of real estate investments, net of cash received	(73,569)		(34,785)
Dispositions of real estate investments, net of selling costs	12,583		96,458
Notes receivable issuances	(26,230)		(17,687)
Notes receivable paydowns	42,301		16,220
Leasing costs	(2,595)		(2,438)
Leasing incentives	(467)		(1,289)
Contributions to equity method investments	(8,096)		—
Net cash used for investing activities	(101,353)		(3,873)
FINANCING ACTIVITIES
Proceeds from issuance of cumulative redeemable perpetual preferred stock, net	—		101,460
Proceeds from issuance of common stock, net	27,428		7,387
Common shares tendered for tax withholding	(553)		(534)
Debt issuances, credit facility and construction loan borrowings	59,942		81,004
Debt and credit facility repayments, including principal amortization	(25,734)		(181,182)
Debt issuance costs	(2,463)		(326)
Acquisition of NCI in consolidated RE investments	(804)		—

Dividends and distributions	(42,662)		(36,058)
Net cash provided by (used for) financing activities	15,154		(28,249)
Net (decrease) increase in cash, cash equivalents, and restricted cash	(16,977)		35,645
Cash, cash equivalents, and restricted cash, beginning of period	50,430		43,579
Cash, cash equivalents, and restricted cash, end of period (1)	$	33,453	$	79,224

Nine Months Ended
September 30,
2020 2019
OPERATING ACTIVITIES
Net income $ 32,270
$ 24,403
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of buildings and tenant improvements 31,565
27,233
Amortization of leasing costs, in-place lease intangibles and below market ground rents - operating leases 10,667
11,641
Accrued straight-line rental revenue (3,434 ) (2,893 )
Amortization of leasing incentives and above or below-market rents (593 ) (287 )
Amortization of right-of-use assets - finance leases 440
230
Accrued straight-line ground rent expense 54
(10 )
Provision for unrealized credit losses 227
0
Adjustment for uncollectable lease accounts 3,195
220
Noncash stock compensation 1,907
1,339
Impairment charges 205
0
Noncash interest expense 1,499
898
Interest expense on finance leases 686
340
Gain on real estate dispositions (6,388 ) (4,699 )
Adjustment for Annapolis Junction loan discount amortization ⁽¹⁾
0
(3,727 )
Change in fair value of derivatives and other 1,424
3,926
Equity in income of unconsolidated real estate entities 0
(273 )
Changes in operating assets and liabilities:
Property assets (6,642 ) (4,225 )
Property liabilities 3,356
2,623
Construction assets (8,328 ) (3,452 )
Construction liabilities 18,824
(642 )
Interest receivable (13,167 ) (7,118 )
Net cash provided by operating activities 67,767
45,527
INVESTING ACTIVITIES
Development of real estate investments (52,157 ) (107,458 )
Tenant and building improvements (8,195 ) (16,889 )
Acquisitions of real estate investments, net of cash received (34,785 ) (133,345 )
Dispositions of real estate investments, net of selling costs 96,458
32,468
Notes receivable issuances (17,687 ) (44,531 )
Notes receivable paydowns 16,220
16,965
Leasing costs (2,438 ) (2,569 )
Leasing incentives (1,289 ) 0
Contributions to equity method investments 0
(535 )
Net cash used for investing activities (3,873 ) (255,894 )
FINANCING ACTIVITIES
Proceeds from issuance of cumulative redeemable perpetual preferred stock, net 101,460
61,001
Proceeds from issuance of common stock, net 7,387
71,749
Common shares tendered for tax withholding (534 ) (344 )
Debt issuances, credit facility and construction loan borrowings 81,004
349,157
Debt and credit facility repayments, including principal amortization (181,182 ) (200,879 )
Debt issuance costs (326 ) (3,225 )
Dividends and distributions (36,058 ) (43,537 )
Net cash provided by (used for) financing activities (28,249 ) 233,922
Net increase in cash and cash equivalents 35,645
23,555
Cash, cash equivalents, and restricted cash, beginning of period 43,579
24,051
Cash, cash equivalents, and restricted cash, end of period ⁽²⁾
$ 79,224
$ 47,606

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

ARMADA HOFFLER PROPERTIES, INC.

Condensed Consolidated Statements of Cash Flows (Continued)

(In thousands)(Unaudited)


	Nine Months Ended September 30,
	2021		2020
Supplemental Disclosures (noncash transactions):
Increase (decrease) in dividends and distributions payable	$	4,423	$	(5,817)
Increase (decrease) in accrued capital improvements and development costs	5,804		(12,564)
Note payable issued in acquisition of noncontrolling interest in real estate investment	—		6,130
Issuance of operating partnership units for acquisitions	—		67
Operating Partnership units redeemed for common shares	131		8,530
Note payable recorded for mandatorily redeemable partnership interest	—		3,829
Debt assumed at fair value in conjunction with real estate purchases	19,989		22,512






Recognition of finance lease right-of-use assets	24,466		—
Recognition of finance lease liabilities	27,940		—

Nine Months Ended
September 30,
2020 2019
Supplemental Disclosures (noncash transactions):
(Decrease) increase in dividends and distributions payable $ (5,817 ) $ 3,949
(Decrease) increase in accrued capital improvements and development costs (12,564 ) (13,204 )
Note payable issued in acquisition of noncontrolling interest in real estate investment 6,130
0
Issuance of operating partnership units for acquisitions 67
71,115
Operating Partnership units redeemed for common shares 8,530
2,700
Note payable recorded for mandatorily redeemable partnership interest 3,829
0
Debt assumed at fair value in conjunction with real estate purchases 22,512
101,390
Note receivable extinguished in conjunction with real estate purchase 0
31,252
Equity method investment redeemed for real estate acquisition 0
23,011
Noncontrolling interest in acquired real estate entity 0
4,870
Recognition of operating lease right-of-use assets ⁽³⁾
0
33,965
Recognition of operating lease liabilities ⁽³⁾
0
41,631
Recognition of finance lease right-of-use assets 0
24,500
Recognition of finance lease liabilities 0
17,871
De-recognition of operating lease right-of-use assets - lease termination 0
440
De-recognition of operating lease liabilities - lease termination 0
440

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

~~(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):

September 30, 2020 September 30, 2019
Cash and cash equivalents $ 73,579
$ 44,195
Restricted cash ^(a)
5,645
3,411
Cash, cash equivalents, and restricted cash $ 79,224
$ 47,606


	September 30, 2021		September 30, 2020
Cash and cash equivalents	$	28,038	$	73,579
Restricted cash (a)	5,415		5,645
Cash, cash equivalents, and restricted cash	$	33,453	$	79,224

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

~~(3) Amounts attributable to 2019 are 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 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 September 30, ~~2020,~~2021, owned ~~73.8%~~74.6% 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.~~thereof.

As of September 30, ~~2020,~~2021, the Company's property portfolio consisted of 5257 stabilized operating properties and 43 properties either under development or not yet stabilized.

Refer to Note 5 for information related to the Company's recent acquisitions and dispositions of 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, particularly in light of the novel coronavirus ("COVID-19") pandemic and its effects on the domestic and global ~~economies.~~economies during interim periods in 2020 and 2021. The pandemic has led to continuous changes in operational restrictions imposed by 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~~instituting 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 for certain periods of time. ~~We expect~~While operations in many areas have been allowed to ~~continue to experience effects~~fully or partially re-open, no assurance can be given that such closures or restrictions will not be reinstituted in the future. The extent of the COVID-19 pandemic’s effect on our business asactivity will depend on future developments, including the ~~impacts from~~duration and intensity of the pandemic, the timing and effectiveness of COVID-19 vaccines (including against COVID-19 variant strains), the duration of, or the reinstatement of, government measures to mitigate the pandemic or address its effects, and the ~~related responses continue~~timing and effectiveness of vaccine administration, all of which are uncertain and difficult to ~~develop.~~predict. Due to the uncertainty surrounding the COVID-19 pandemic, we are not able at this time to estimate the full effect of these factors on our business. 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, ~~2019.~~2020.

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

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judgment after considering past, current, and expected events and economic conditions. Actual results could differ significantly from management’s estimates.

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Reclassifications

Certain items have been reclassified from their prior year classifications to conform to the current year presentation. The amounts previously classified as Interest expense on indebtedness and Interest expense on finance leases for the three and nine months ended September 30, 2020 in the Condensed Consolidated Statement of Comprehensive Income are now included in a single line item as Interest expense. These reclassifications had no effect on net income or stockholders' equity as previously reported.

Recent Accounting Pronouncements

Recently Issued Accounting Standards ~~Adopted in 2020~~

~~Credit losses~~

Not Yet Adopted:

~~In June 2016, the 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 replaces the "incurred loss" approach under previous guidance with an "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 entities to consider a broader range of information to estimate expected credit losses, which 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 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 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 fair value measurements in Topic 820. The Company adopted the new standard on January 1, 2020. The adoption of the ASU did not have a material impact on disclosures in the Company's consolidated financial statements.

Reference Rate Reform

In March 2020, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ASU 2020-04 Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)., which became effective on March 12, 2020 and generally can be applied through December 31, 2022. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company is currently evaluating the effect that adopting this standard may have on its Consolidated Financial Statements.

~~Lease Modification Accounting Q&A~~Earnings Per Share

In ~~April~~August 2020, the FASB ~~staff~~ issued ~~a question~~ASU 2020-06 an update to ASC Topic 470 and ~~answer document (the "Lease Modification Q&A") focused on~~ASC Topic 815, which will be effective beginning January 1, 2022. ASU 2020-06 simplifies the ~~application of lease~~ accounting ~~guidance~~for convertible instruments and removes certain settlement conditions that are required for equity contracts to ~~lease concessions provided as a result of~~qualify for 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 rightsderivative scope exception. This ASU also simplifies diluted earnings per share calculation in certain areas 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.provides updated disclosure requirements. The Company ~~adopted this guidance during~~is currently evaluating the ~~second quarter~~impact of 2020 and elected to not apply the existing lease modification accounting framework in instances where the total payments under a modified lease are substantially the same as or less than the total payments under the existing lease.ASU 2020-06 on its consolidated financial statements.

Other Accounting Policies

See the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 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.

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Net operating income of the Company’s reportable segments for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 was as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Office real estate
Rental revenues $ 11,456
$ 10,283
$ 32,142
$ 23,221
Rental expenses 3,042
2,753
7,879
6,092
Real estate taxes 1,375
1,141
3,749
2,320
Segment net operating income 7,039
6,389
20,514
14,809
Retail real estate
Rental revenues 15,669
20,780
54,794
57,272
Rental expenses 2,618
3,096
8,096
8,556
Real estate taxes 1,808
2,219
5,981
5,923
Segment net operating income 11,243
15,465
40,717
42,793
Multifamily residential real estate
Rental revenues 12,511
11,157
34,904
29,014
Rental expenses 4,563
4,024
11,932
9,865
Real estate taxes 1,577
820
3,596
2,516
Segment net operating income 6,371
6,313
19,376
16,633
General contracting and real estate services
Segment revenues 58,617
27,638
163,283
66,118
Segment expenses 56,509
26,446
157,401
62,855
Segment gross profit 2,108
1,192
5,882
3,263
Net operating income $ 26,761
$ 29,359
$ 86,489
$ 77,498


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Office real estate
Rental revenues	$	11,933	$	11,456	$	35,324	$	32,142
Rental expenses	3,409		3,042		9,222		7,879
Real estate taxes	1,547		1,375		4,318		3,749
Segment net operating income	6,977		7,039		21,784		20,514
Retail real estate
Rental revenues	20,223		15,669		57,682		54,794
Rental expenses	3,270		2,618		9,119		8,096
Real estate taxes	2,100		1,808		6,307		5,981
Segment net operating income	14,853		11,243		42,256		40,717
Multifamily residential real estate
Rental revenues	17,404		12,511		49,673		34,904
Rental expenses	6,038		4,563		16,500		11,932
Real estate taxes	1,896		1,577		5,689		3,596
Segment net operating income	9,470		6,371		27,484		19,376
General contracting and real estate services
Segment revenues	17,502		58,617		71,473		163,283
Segment expenses	15,944		56,509		68,350		157,401
Segment gross profit	1,558		2,108		3,123		5,882
Net operating income	$	32,858	$	26,761	$	94,647	$	86,489

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 September 30, ~~2020~~2021 and ~~2019~~2020 exclude revenue related to intercompany construction contracts of ~~$3.2~~$8.6 million and ~~$22.4~~$3.2 million, respectively, as it is eliminated in consolidation. General contracting and real estate services revenues for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 exclude revenue related to intercompany construction contracts of ~~$24.7~~$16.0 million and ~~$82.6~~$24.7 million, respectively.

General contracting and real estate services expenses for the three months ended September 30, ~~2020~~2021 and ~~2019~~2020 exclude expenses related to intercompany construction contracts of ~~$3.2~~$8.6 million and ~~$22.2~~$3.2 million, respectively. General contracting and real estate services expenses for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 exclude expenses related to intercompany construction contracts of ~~$24.5~~$16.0 million and ~~$81.8~~$24.5 million, respectively.

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The following table reconciles net operating income to net income, the most directly comparable GAAP measure, for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Net operating income $ 26,761
$ 29,359
$ 86,489
$ 77,498
Depreciation and amortization (14,176 ) (15,465 ) (42,232 ) (38,874 )
Amortization of right-of-use assets - finance leases (147 ) (145 ) (440 ) (230 )
General and administrative expenses (2,601 ) (2,977 ) (9,382 ) (9,329 )
Acquisition, development and other pursuit costs (26 ) (93 ) (555 ) (550 )
Impairment charges (47 ) 0
(205 ) 0
Gain on real estate dispositions 3,612
4,699
6,388
4,699
Interest income 4,417
5,710
16,055
16,622
Interest expense on indebtedness (7,294 ) (8,828 ) (22,252 ) (22,205 )
Interest expense on finance leases (229 ) (228 ) (686 ) (340 )
Equity in income of unconsolidated real estate entities 0
0
0
273
Change in fair value of derivatives and other 318
(530 ) (1,424 ) (3,926 )
Unrealized credit loss release (provision) 33
0
(227 ) 0
Other income (expense), net 177
362
521
426
Income tax benefit 28
199
220
339
Net income $ 10,826
$ 12,063
$ 32,270
$ 24,403


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net operating income	$	32,858	$	26,761	$	94,647	$	86,489
Depreciation and amortization	(16,886)		(14,176)		(52,237)		(42,232)
Amortization of right-of-use assets - finance leases	(278)		(147)		(745)		(440)
General and administrative expenses	(3,449)		(2,601)		(10,957)		(9,382)
Acquisition, development and other pursuit costs	(8)		(26)		(111)		(555)
Impairment charges	—		(47)		(3,122)		(205)
Gain (loss) on real estate dispositions, net	(113)		3,612		3,604		6,388
Interest income	3,766		4,417		14,628		16,055
Interest expense	(8,827)		(7,523)		(25,220)		(22,938)

Change in fair value of derivatives and other	131		318		838		(1,424)
Unrealized credit loss release (provision)	617		33		284		(227)
Other income (expense), net	(105)		177		81		521
Income tax benefit	42		28		522		220
Net income	$	7,748	$	10,826	$	22,212	$	32,270

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 89 ground leases on ~~7 properties with initial~~8 properties. These ground leases have maximum lease terms (including renewal options) that ~~range from 5 to 65 years~~expire between 2074 and ~~options to extend up to an additional 70 years in certain cases.~~2117. 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. NaN of these leases have been classified as operating leases and 23 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.

Lessor Disclosures

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 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.

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Rental revenue for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 comprised the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Base rent and tenant charges	$	48,391	$	37,532	$	137,675	$	117,812
Accrued straight-line rental adjustment	883		1,925		4,210		3,435
Lease incentive amortization	(167)		(164)		(485)		(497)
Above/below market lease amortization	453		343		1,279		1,090
Total rental revenue	$	49,560	$	39,636	$	142,679	$	121,840

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Base rent and tenant charges $ 37,532
$ 41,236
$ 117,812
$ 106,227
Accrued straight-line rental adjustment 1,925
745
3,435
2,893
Lease incentive amortization (164 ) (187 ) (497 ) (555 )
Above/below market lease amortization 343
426
1,090
942
Total rental revenue $ 39,636
$ 42,220
$ 121,840
$ 109,507

5. Real Estate Investment

Property Acquisitions

Delray Beach Plaza

On ~~January 10, 2020,~~February 26, 2021, the Company ~~entered into an operating agreement with~~acquired Delray Beach Plaza, a ~~partner to develop a mixed-use~~Whole Foods-anchored retail property located 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~~Delray Beach, Florida, for a ~~purchase~~contract price of ~~$6.3~~$27.6 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 entered into an operating agreement with a partner to develop a mixed-use property in Belmont, North 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 purchase price of $2.3 million for this project. The Company is responsible for funding the equity requirements of this development, including the $2.3 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 Chronicle Partnership in its consolidated financial statements.

In June 2020, the Company exercised its option to purchase the remaining 21% ownership interest in 1405 Point in exchange for increased ground lease payments to be made over the approximately 42-year remaining lease term. The Company recorded a note payable of $6.1 million, which represents the present value of these payments. The ground lessor is an affiliate of our former joint venture partner.

On August 31, 2020, the Company entered into an operating agreement with a partner to develop a mixed-use project in Gainesville, Georgia. The Company has a 95% ownership interest in Gainesville Development, LLC (the "Gainesville Partnership"). The Gainesville Partnership acquired undeveloped land on August 31, 2020 for a purchase price of $5.0 million and immediately began development of the site. The Company is responsible for funding the equity requirements of this development, which are estimated to total $17.3 million. Management has concluded that this entity is a VIE as it lacks sufficient equity to fund its operations without additional financial support.

By August 31, 2023, the Company is required to acquire its partner's 5% ownership interest for up to $4.2 million, subject to the initial operating performance of the property. As the Company is required to obtain this ownership interest, the Company consolidates the project in its consolidated financial statements. The Company has recorded a note payable liability of $3.8 million, which is the fair value of the anticipated payments to be made to its partner.

~~On September 22, 2020, the Company exercised its option to purchase Nexton Square for $17.9 million cash and the assumption of a note payable of $22.9 million. The Company also incurred~~plus capitalized ~~acquisition~~transaction costs of $0.2 million. The developer of this property repaid the Company's mezzanine note receivable of ~~$16.4~~$14.3 million at the time of the acquisition.

Hoffler Place

~~Table~~On June 28, 2021, the Company purchased the remaining 7.5% ownership interest in Hoffler Place for a cash payment of ~~Contents~~

$0.3 million.

Summit Place

On June 28, 2021, the Company purchased the remaining 10% ownership interest in Summit Place for a cash payment of $0.5 million.

Overlook Village

On July 28, 2021, the Company acquired Overlook Village, a retail center in Asheville, North Carolina, for a contract price of $28.3 million plus capitalized acquisition costs of $0.1 million.

Greenbrier Square

On August 24, 2021, the Company acquired Greenbrier Square, a Kroger-anchored retail center in Chesapeake, Virginia, for total consideration of $36.5 million plus capitalized acquisition costs of $0.3 million. As a part of this acquisition, the Company assumed a note payable of $20.0 million.

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 ~~Nexton Square acquisition~~3 operating properties purchased during the nine months ended September 30, 2021 (in thousands):


	Delray Beach Plaza		Overlook Village		Greenbrier Square
Land	$	—	$	6,328	$	8,549
Site improvements	4,607		1,727		1,974
Building and improvements	22,544		18,375		19,196

In-place leases	7,209		3,997		6,659
Above-market leases	—		81		1,753
Below-market leases	(3,121)		(2,146)		(1,365)
Finance lease liabilities	(27,940)		—		—
Finance lease right-of-use assets	24,466		—		—
Fair value adjustment on acquired debt	—		—		11
Net assets acquired	$	27,765	$	28,362	$	36,777

Nexton Square
Land $ 9,885
Site improvements 3,690
Building and improvements 24,070
In-place leases 5,239
Below-market leases (1,877 )
Fair value adjustment on acquired debt 364
Net assets acquired $ 41,371

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Property Dispositions

~~Property Disposition~~

On May 29, 2020, the Company sold a portfolio of 7 retail properties for $90.0 million. The portfolio consisted of Alexander Pointe, Bermuda Crossroads, Gainsborough Square, Harper Hill Commons, Indian Lakes Crossing, Renaissance Square, and Stone House Square. The gain on sale was $2.8 million. In connection with the sale of this portfolio, the Company repaid $61.9 million on the revolving credit facility, resulting in net proceeds of $25.9 million.

~~On September 1, 2020,~~January 4, 2021, the Company completed the sale of the ~~Walgreen's~~7-Eleven outparcel at Hanbury ~~Village. Net proceeds after the transaction costs were $7.0~~Village for a sales price of $2.9 million. The gain on disposition was ~~$3.6~~$2.4 million.

On January 14, 2021, the Company completed the sale of a land outparcel at Nexton Square for a sale price of $0.9 million. There was no gain or loss on the disposition. In conjunction with the sale, the Company paid down the Nexton Square loan by $0.8 million.

On March 16, 2021, the Company completed the sale of Oakland Marketplace for a sale price of $5.5 million. The gain on disposition was $1.1 million.

On March 18, 2021, the Company completed the sale of easement rights at Courthouse 7-Eleven for a sale price of $0.3 million. The gain on disposition was $0.2 million.

Impairment and Disposal of Real Estate

During the three months ended March 31, 2021, the Company recognized impairment of real estate of $3.0 million related to the Socastee Commons shopping center in Myrtle Beach, South Carolina. The Company anticipated a decline in cash flows due to the expiration of the anchor tenant lease. The Company had not re-leased the anchor tenant space and had determined that it was not probable that this space would be leased at rates sufficient to recover the Company’s investment in the property. The Company recorded an impairment loss equal to the excess of the book value of the property’s assets over the estimated fair value of the property during the first quarter of 2021. On August 25, 2021, the Company completed the sale of Socastee Commons for a price of $3.8 million. The loss on disposition was $0.1 million.

Real Estate Investments Held for Sale

During the three months endedSeptember 30, 2021, the Company classified the Johns Hopkins Village multifamily property in real estate investments held for sale. The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2021.

Equity Method Investment

Harbor Point Parcel 3

The Company owns a 50% interest in Harbor Point Parcel 3, a joint venture with Beatty Development Group, for purposes of developing T. Rowe Price's new global headquarters office building in Baltimore, Maryland. The Company is a noncontrolling partner in the joint venture and will serve as the project's general contractor. During the nine months ended September 30, 2021, the Company invested $8.1 million in Harbor Point Parcel 3. The Company has an estimated equity commitment of up to $30.0 million relating to this project. As of September 30, 2021 and December 31, 2020, the carrying value of the Company's investment in Harbor Point Parcel 3 was $9.2 million and $1.1 million, respectively. For the nine months ended September 30, 2021, Harbor Point Parcel 3 had no operating activity, and therefore the Company received no allocated income.

Based on the terms of the operating agreement, the Company has concluded that Harbor Point Parcel 3 is a VIE and that the Company holds a variable interest. The Company does not have the power to direct the activities of the project that most significantly impact its performance. Accordingly, the Company is not the project's primary beneficiary and, therefore, does not consolidate Harbor Point Parcel 3 in its consolidated financial statements. The Company has significant influence over the project due to its 50% ownership as well as certain rights and responsibilities relating to the development project. The Company's investment in the project is recorded as an equity method investment in the consolidated balance sheets.

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6. Notes Receivable and Current Expected Credit Losses

Notes Receivable

The Company had the following notes receivable outstanding as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 ($ in thousands):

Outstanding loan amount Interest compounding
Development Project September 30,
2020 December 31,
2019 Maximum loan commitment Interest rate
The Residences at Annapolis Junction $ 42,767
$ 40,049
$ 48,105
10.0 %
^(a)
Monthly
Delray Plaza 15,493
12,995
17,000
15.0 %
^(a)(b)(c)
Annually
Nexton Square 0
15,097
17,000
10.0 % Monthly
Interlock Commercial 82,351
59,224
103,000
15.0 %
^(c)
None
Solis Apartments at Interlock 28,109
25,588
41,100
13.0 % Annually
Total mezzanine 168,720
152,953
$ 226,205

Other notes receivable 14
1,147

Notes receivable guarantee premium 3,034
5,271

Allowance for credit losses (3,052 )
0

Total notes receivable $ 168,716
$ 159,371


	Outstanding loan amount										Interest compounding
Development Project	September 30, 2021			December 31, 2020		Maximum loan commitment		Interest rate

Delray Beach Plaza	$	—		$	14,289	$	17,000	15.0	%	(a)	Annually

Interlock Commercial	92,254			85,318		107,000		15.0	%	(b)	None
Nexton Multifamily	18,549			—		22,315		11.0	%		Annually
Solis Apartments at Interlock	—			28,969		41,100		13.0	%		Annually
Total mezzanine	110,803			128,576		$	187,415
Other notes receivable	7,124			6,809
Notes receivable guarantee premium	1,631			2,631
Allowance for credit losses	(1,394)		(c)	(2,584)

Total notes receivable	$	118,164		$	135,432

(a) Loan was placed on nonaccrual status effective April 1, 2020.

(b) ~~$2.0~~$3.0 million of this loan is subject to an interest rate of 6%18%.

(c) ~~This loan~~The amount excludes $0.1 million of CECL allowance that relates to the unfunded commitments, which was ~~modified on October 2, 2020. See Note 15.~~recorded as a liability under Other Liabilities in our consolidated balance sheet.

~~Table of Contents~~

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 generally added to the loan receivable balances. The Company recognized interest income for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
Development Project	2020			2019			2020			2019			Development Project	2021			2020			2021			2020
1405 Point	$	0		$	0		$	0		$	783
North Decatur Square	0			178			0			1,509

The Residences at Annapolis Junction	0		^(a)	2,340		^(b)	2,468		^(a)(c)	6,536		^(b)	The Residences at Annapolis Junction	$	—		$	—	(a)	$	—		$	2,468	(a)(b)
Delray Plaza	0		^(a)	429			489		^(a)	1,153
Delray Beach Plaza													Delray Beach Plaza	—			—		(a)	—		(a)	489		(a)
Nexton Multifamily													Nexton Multifamily	397			—			658			—
Nexton Square	380			550			1,177			1,584			Nexton Square	—			380			—			1,177
Interlock Commercial	3,189		^(c)	1,595			9,364		^(c)	3,425			Interlock Commercial	3,260		(b)	3,189		(b)	9,644		(b)	9,364		(b)
Solis Apartments at Interlock	847			596			2,522			1,567			Solis Apartments at Interlock	—			847			4,005		(c)	2,522
Total mezzanine	4,416			5,688			16,020			16,557			Total mezzanine	3,657			4,416			14,307			16,020
Other interest income	1			22			35			65			Other interest income	109			1			321			35
Total interest income	$	4,417		$	5,710		$	16,055		$	16,622		Total interest income	$	3,766		$	4,417		$	14,628		$	16,055

(a) Loan was placed on nonaccrual status effective April 1, 2020.

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

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

Delray Beach 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.

~~Interlock Commercial~~

~~In May 2020,~~February 26, 2021, the Company ~~modified the Interlock Commercial loan to allow~~acquired Delray Beach Plaza, a Whole Foods-anchored retail property located in Delray Beach, Florida for ~~an additional $8.0~~a contract price of $27.6 million plus capitalized transaction costs of ~~loan funding; this additional loan funding may be available for cost overruns as well as the building of townhome units as an additional phase of this development project.~~$0.2 million. 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.~~

~~Nexton Square~~

~~On September 22, 2020, as part of the Nexton Square acquisition, the~~ developer of this property repaid the Company's mezzanine note receivable of ~~$16.4 million.~~$14.3 million at the time of the acquisition, which consisted of $12.3 million of principal and $2.0 million of accrued interest.

~~Current Expected Credit~~

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Interlock Commercial

In March 2021, the Company loaned an additional $7.5 million as part of the Interlock Commercial loan to fund project costs due to an additional equity requirement to reduce the senior loan. In September 2021, the loan was modified to increase the maximum loan commitment to $107.0 million and to modify and clarify certain rights and responsibilities under the loan.

During the three months ended September 30, 2021, the borrower repaid $5.0 million, comprised of $3.8 million of principal and $1.2 million of accrued interest. During the nine months ended September 30, 2021, the borrower repaid $11.0 million of this loan, comprised of $6.8 million of principal and $4.2 million of accrued interest.

Nexton Multifamily

On April 1, 2021, the Company entered into a $22.3 million preferred equity investment for the development of a multifamily property located in Summerville, South Carolina, adjacent to the Company's Nexton Square property. The investment has economic terms consistent with a note receivable, including a mandatory redemption or maturity on October 1, 2026, and it is accounted for as a note receivable. The Company's investment bears interest at a rate of 11%, compounded annually.

Management has concluded that this entity is a VIE. Because the other investor in the project, TP Nexton LLC, is the developer of Nexton Multifamily, the Company does not have the power to direct the activities of the project that most significantly impact its performance. Accordingly, the Company is not the project's primary beneficiary and does not consolidate the project in its consolidated financial statements.

Solis Apartments at Interlock

On June 7, 2021 the borrower paid off the Solis Apartments at Interlock note receivable in full. The Company received a total of $33.0 million, which consisted of $23.2 million outstanding principal, $7.4 million of accrued interest, and a prepayment premium of $2.4 million that resulted from the early payoff of the loan.

Allowance for Loan Losses

The Company is exposed to credit losses primarily through its mezzanine lending activities. As of September 30, ~~2020,~~2021, the Company had 42 mezzanine loans, ~~all~~both of which are ~~secured by second liens on~~financing development projects in various stages of 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 is generally not expected to be paid until a sale of the project after completion of the development.

The Company's management performs a quarterly analysis of the loan portfolio to determine 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:

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

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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 will also consider placing the loan on nonaccrual status if it does not believe that additional interest accruals will ultimately be collected.

On a quarterly basis, the Company compares the risk inherent in its loans to industry loan loss data experienced during past business cycles. The Company updated the risk ratings for each of its notes receivable ~~during the three months ended~~as of September 30, ~~2020. The Company~~2021 and obtained industry loan loss data relative to these risk ~~ratings as of June 30, 2020.~~

~~The following table presents amortized cost basis~~ratings. Each of the ~~portfolio by year of origination and risk rating~~outstanding loans as of September 30, ~~2020 (in thousands):~~

2021 was Pass-rated.

Year of Origination
Risk Ratings 2020 2019 2018 2017 2016 Total
Pass $ 0
$ 0
$ 111,611
$ 0
$ 0
$ 111,611
Special Mention 0
0
0
0
0
0
Substandard 0
0
0
14,723
42,368
57,091
Total amortized cost basis $ 0
$ 0
$ 111,611
$ 14,723
$ 42,368
$ 168,702

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~~As of~~At December 31, ~~2019, there was 0 allowance for loan losses. At September 30,~~ 2020, the Company reported ~~$168.7~~$135.4 million of notes receivable, net of allowances of ~~$3.1~~$2.6 million. At September 30, 2021, the Company reported $118.2 million of notes receivable, net of allowances of $1.4 million. Changes in the allowance for the three and nine months ended September 30, 2021 and 2020 were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Beginning balance	$	2,129	$	3,085	$	2,584	$	—
Cumulative effect of accounting change	—		—		—		2,825
Unrealized credit loss provision (release)	(617)		(33)		(284)		227
Extinguishment due to acquisition	—		—		(788)		—


Ending balance (a)	$	1,512	$	3,052	$	1,512	$	3,052

Nine Months Ended
September 30, 2020
Beginning balance (December 31, 2019) $ 0
Cumulative effect of accounting change 2,825
Unrealized credit loss provision 227
Ending balance $ 3,052
(a) The amount as of September 30, 2021 includes $0.1 million of allowance related to the unfunded commitments, which was recorded as Other liabilities on the Consolidated Balance Sheet.

The Company places loans on ~~nonaccrual~~non-accrual status when the loan balance, together with the balance of any senior loan, approximately equals the estimated realizable value of the underlying development project. As of December 31, ~~2019,~~2020, the Company had one loan with non-accrual status with an amortized cost basis of $13.6 million. As of September 30, 2021, there were no loans on ~~nonaccrual~~non-accrual status. During the nine months ended September 30, 2020, the Company placed the loans for Delray Plaza and The Residences at Annapolis Junction on nonaccrual status with total amortized cost basis of $57.1 million. As a result, there was $4.2 million of interest income not recognized during the nine months ended September 30, 2020.

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 September 30, ~~2020~~2021 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.

~~Table of Contents~~

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 nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	Nine Months Ended September 30, 2021				Nine Months Ended September 30, 2020
	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	$	138	$	6,088	$	249	$	5,306
Revenue recognized that was included in the balance at the beginning of the period	—		(6,088)		—		(5,306)
Increases due to new billings, excluding amounts recognized as revenue during the period	—		3,791		—		7,237
Transferred to receivables	(665)		—		(468)		—
Construction contract costs and estimated earnings not billed during the period	370		—		215		—
Changes due to cumulative catch-up adjustment arising from changes in the estimate of the stage of completion	527		(1,117)		219		(152)
Ending balance	$	370	$	2,674	$	215	$	7,085

Nine Months Ended
September 30, 2020 Nine Months Ended
September 30, 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
Beginning balance $ 249
$ 5,306
$ 1,358
$ 3,037
Revenue recognized that was included in the balance at the beginning of the period —
(5,306 ) —
(3,037 )
Increases due to new billings, excluding amounts recognized as revenue during the period —
7,237
—
4,256
Transferred to receivables (468 ) —
(2,015 ) —
Construction contract costs and estimated earnings not billed during the period 215
—
624
—
Changes due to cumulative catch-up adjustment arising from changes in the estimate of the stage of completion 219
(152 ) 657
(923 )
Ending balance $ 215
$ 7,085
$ 624
$ 3,333

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 ~~$1.2~~$2.6 million and ~~$0.9~~$1.7 million were deferred as of September 30, ~~2020~~2021 and

December 31, ~~2019,~~2020, respectively. Amortization of pre-contract costs for the nine months ended September 30, 2021 and 2020 ~~and 2019~~ was ~~$0.7~~$0.2 million and ~~$0.1~~$0.7 million, respectively.

Construction receivables and payables include retentions, which are amounts that are generally withheld until the completion of the contract or the satisfaction of certain restrictive conditions such as fulfillment guarantees. As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, construction receivables included retentions of ~~$16.6~~$7.1 million and ~~$9.0~~$17.1 million, respectively. The Company expects to collect substantially all construction receivables outstanding as of September 30, ~~2020~~2021 during the next twelve months. As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, construction payables included retentions of ~~$18.6~~$6.5 million and ~~$18.0~~$17.7 million, respectively. The Company expects to pay substantially all construction payables outstanding as of September 30, ~~2020~~2021 during the next twelve months.

The Company’s net position on uncompleted construction contracts comprised the following as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 (in thousands):


	September 30, 2021		December 31, 2020
Costs incurred on uncompleted construction contracts	$	360,247	$	461,725
Estimated earnings	14,427		13,205
Billings	(376,978)		(480,880)
Net position	$	(2,304)	$	(5,950)

Construction contract costs and estimated earnings in excess of billings	$	370	$	138
Billings in excess of construction contract costs and estimated earnings	(2,674)		(6,088)
Net position	$	(2,304)	$	(5,950)

September 30, 2020 December 31, 2019
Costs incurred on uncompleted construction contracts $ 852,966
$ 695,564
Estimated earnings 30,354
24,553
Billings (890,190 ) (725,174 )
Net position $ (6,870 ) $ (5,057 )

Construction contract costs and estimated earnings in excess of billings $ 215
$ 249
Billings in excess of construction contract costs and estimated earnings (7,085 ) (5,306 )
Net position $ (6,870 ) $ (5,057 )
The above table reflects the net effect of projects closed as of September 30, 2021 and December 31, 2020, respectively.

The Company’s balances and changes in construction contract price allocated to unsatisfied performance obligations (backlog) as of September 30, ~~2020~~2021 and ~~2019~~2020 were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Beginning backlog	$	70,219	$	193,742	$	71,258	$	242,622
New contracts/change orders	53,590		(12,461)		106,992		43,469
Work performed	(16,944)		(58,590)		(71,385)		(163,400)
Ending backlog	$	106,865	$	122,691	$	106,865	$	122,691

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Beginning backlog $ 193,742
$ 178,632
$ 242,622
$ 165,863
New contracts/change orders (12,461 ) 22,054
43,469
73,250
Work performed (58,590 ) (27,594 ) (163,400 ) (66,021 )
Ending backlog $ 122,691
$ 173,092
$ 122,691
$ 173,092

~~During the three months ended September 30, 2020, the Company canceled a contract for the construction of a hotel due to the delay of the owner.~~ The Company expects to complete a majority of the uncompleted contracts in place as of September 30, ~~2020~~2021 during the next 12 to 18 months.

The Company has a senior credit facility that was amended and restated on October 3, 2019, 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 $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 January 24, 2024, with 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 January 24, 2025.

The revolving credit facility bears interest at LIBOR (the London Inter-Bank Offered Rate) plus a margin ranging from 1.30% to 1.85% and the term loan facility bears interest at LIBOR plus a margin ranging from 1.25% to 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 September 30, ~~2020, there was 0 balance outstanding on the revolving credit facility. As of~~2021 and December 31, ~~2019,~~2020, the outstanding balance on the revolving credit facility was ~~$110.0 million.~~$30.0 million and $10.0 million, respectively. The outstanding balance on the term loan facility was $205.0 million as of both ~~of those~~ dates. As of September 30, ~~2020,~~2021, the effective interest rates on the revolving credit facility and the term loan facility were ~~1.75%~~1.58% and ~~1.70%~~1.53%, respectively. The Company may, at any time, voluntarily prepay any loan under the credit facility in whole or in part without premium or penalty. ~~On May 29, 2020, in conjunction with the sale of 7 unencumbered operating properties, the Company repaid $61.9 million on the revolving credit facility.~~ The Company's unencumbered borrowing pool will support revolving borrowings of up to ~~$125.0~~$134 million as of September 30, ~~2020.~~2021.

The Operating Partnership is the borrower, 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.

On January 7, 2021, the Operating Partnership entered into a $15.0 million standby letter of credit using the available capacity under the credit facility to guarantee the funding of its investment in the Harbor Point Parcel 3 joint venture, which is the developer of T. Rowe Price's new global headquarters. This letter of credit is available for draw down on the revolving credit facility in the event the Company does not meet its equity requirement.

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

Other ~~2020~~2021 Financing Activity

~~During the nine months ended September 30, 2020,~~On January 15, 2021, the Company ~~borrowed $38.2 million under its existing construction loans to fund new development~~refinanced the loan secured by 4525 Main Street and ~~construction.~~

In the second quarter of 2020, the Company proactively obtained a waiver from the lender for the Premier Retail/Apartments loan wherein the Company did not have to meet the minimum debt service coverage requirement for the period ended June 30, 2020.Encore Apartments. The Company ~~also proactively obtained a waiver from~~increased the ~~lender for~~balance by $1.5 million, bringing the ~~249 Central Park, Fountain Plaza Retail, and South Retail properties wherein~~total balance of the ~~Company did not have~~loan to ~~meet the minimum debt service coverage requirement for the period ended June 30, 2020 and will not have to meet the requirement for the period ending December 31, 2020.~~

In June 2020, the Company exercised its option to purchase the remaining 21% ownership interest in 1405 Point in exchange for increased ground lease payments to be made over the approximately 42-year remaining lease term.$57.0 million. The ~~Company recorded a note payable of $6.1 million, which represents the present value of these payments. The ground lessor is an affiliate of our former joint venture partner.~~

~~On August 31, 2020, the Company entered into a $31.4 million construction loan agreement for the development project owned by the Gainesville Partnership. The~~new loan bears interest at a rate of ~~LIBOR plus a spread of 3.00% with a floor of 3.75%. The loan matures~~2.93% and will mature on ~~August 31, 2024 and has one 12-month extension option. The Company's joint venture partner in the Gainesville Partnership has guaranteed payment of 55% of loan advances.~~February 10, 2026.

On ~~September 22, 2020, as a part of~~January 28, 2021, the Company refinanced the Nexton Square ~~acquisition,~~loan and paid the ~~Company assumed a note payable of $22.9~~balance down by $2.0 million, bringing the balance to $20.1 million. The loan bears interest at a rate of LIBOR plus a spread of 2.25% (LIBOR has a 0.25% floor) and will mature on February 1, 2023.

On March 8, 2021, the Company obtained a loan secured by Delray Beach Plaza in the amount of $14.5 million. The loan bears interest at a rate of LIBOR plus a spread of 3.00% and will mature on March 8, 2026.

On April 15, 2021, the Company refinanced the $19.5 million Southgate Square loan. The loan bears interest at a rate of LIBOR plus a spread of 2.25% (LIBOR has a 0.75% floor) and will mature on April 29, 2024. The loan term may be extended for an additional two years under the satisfaction of certain criteria.

On May 5, 2021, the Company entered into a $35.1 million construction loan agreement for the Chronicle Mill development project. The loan bears interest rate at LIBOR plus a spread of 3.00% (LIBOR has a 0.25% floor). The loan matures on May 5, 2024 and has 2 12-month extension options.

On August ~~8, 2021.~~24, 2021, as a part of the Greenbrier Square acquisition, the Company assumed a note payable of $20.0 million. The loan bears interest at a fixed rate of 3.74% and will mature on October 10, 2027.

In September 2021, the loan covenants for the syndicated loan secured by Wills Wharf were modified to extend the deadline for the Company to meet a lease-up requirement included in the loan agreement from October 1, 2021 to February 1, 2022.

On September ~~22, 2020,~~30, 2021, the Company ~~paid off~~refinanced the ~~Hanbury Village~~ loan ~~in full. This property was added to~~secured by Thames Street Wharf. The new $71.0 million loan bears interest at a rate of Bloomberg Short-Term Bank Yield Index ("BSBY") plus a spread of 1.30% and will mature on September 30, 2026. The Company simultaneously entered into an interest rate swap agreement that effectively fixes the ~~unencumbered borrowing base~~interest rate at 2.35% for the ~~revolving credit facility.~~term of the loan.

During the nine months ended September 30, ~~2020,~~2021, the Company ~~was in compliance with the applicable terms of all loan covenants after giving effect~~borrowed $13.3 million under its existing construction loans to ~~the waivers granted.~~fund new development and construction.

9. Derivative Financial Instruments

The Company 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 September 30, ~~2020,~~2021, the Company had the following LIBOR and Secured Overnight Financing Rate ("SOFR") interest rate caps ($ in thousands):

Effective Date Maturity Date Notional Amount Strike Rate Premium Paid
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
3/1/2020 3/1/2022 100,000
^(a)
1.50 % 111
7/1/2020 7/1/2023 100,000
^(a)
0.50 % 232
Total $ 450,000
$ 990

Effective Date

Maturity Date

Notional Amount

Strike Rate

Premium Paid

5/15/2019

6/1/2022

100,000

2.50% (LIBOR)

288

1/10/2020

2/1/2022

50,000

(a)

1.75% (LIBOR)

1/28/2020

2/1/2022

50,000

(a)

1.75% (LIBOR)

3/2/2020

3/1/2022

100,000

(a)

1.50% (LIBOR)

111

7/1/2020

7/1/2023

100,000

(a)

0.50% (LIBOR)

232

11/1/2020

11/1/2023

84,375

(a)

1.84% (SOFR)

(b)

2/2/2021

2/1/2023

100,000

0.50% (LIBOR)

3/4/2021

4/1/2023

14,479

2.50% (LIBOR)

5/5/2021

5/1/2023

50,000

0.50% (LIBOR)

5/5/2021

5/1/2023

35,100

0.50% (LIBOR)

6/16/2021

7/1/2023

100,000

0.50% (LIBOR)

120

Total

783,954

1,170

As of September 30, ~~2020,~~2021, the Company held the following floating-to-fixed interest rate swaps ($ in thousands):

For the interest rate swaps and caps designated as cash flow hedges, realized losses are reclassified out of accumulated other comprehensive loss to interest expense in the Condensed Consolidated Statements of Comprehensive Income due to payments made to the swap counterparty. During the next 12 months, the Company anticipates reclassifying approximately ~~$4.4~~$4.6 million of net hedging losses from accumulated other comprehensive loss into earnings to offset the variability of the hedged items during this period.

The Company’s derivatives were comprised of the following as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 (in thousands):


	September 30, 2021						December 31, 2020
	Notional Amount		Fair Value				Notional Amount		Fair Value
			Asset		Liability				Asset		Liability
Derivatives not designated as accounting hedges
Interest rate swaps	$	50,000	$	—	$	(2,030)	$	50,000	$	—	$	(3,056)
Interest rate caps	399,579		217		—		150,000		4		—
Total derivatives not designated as accounting hedges	449,579		217		(2,030)		200,000		4		(3,056)
Derivatives designated as accounting hedges
Interest rate swaps	290,124		—		(7,380)		290,231		—		(11,797)
Interest rate caps	384,375		144		—		384,375		86		—
Total derivatives	$	1,124,078	$	361	$	(9,410)	$	874,606	$	90	$	(14,853)

September 30, 2020 December 31, 2019
Notional
Amount Fair Value Notional
Amount Fair Value
Asset Liability Asset Liability
Derivatives not designated as accounting hedges
Interest rate swaps $ 50,000
$ 0
$ (3,389 ) $ 100,000
$ 0
$ (1,992 )
Interest rate caps 150,000
11
0
250,000
25
0
Total derivatives not designated as accounting hedges 200,000
11
(3,389 ) 350,000
25
(1,992 )
Derivatives designated as accounting hedges
Interest rate swaps 290,594
0
(13,081 ) 146,642
0
(5,728 )
Interest rate caps 300,000
115
0
0
0
0
Total derivatives $ 790,594
$ 126
$ (16,470 ) $ 496,642
$ 25
$ (7,720 )

The changes in the fair value of the Company’s derivatives during the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were comprised of the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Interest rate swaps	$	(60)	$	323	$	2,315	$	(10,907)
Interest rate caps	(234)		(111)		(27)		(391)
Total change in fair value of interest rate derivatives	$	(294)	$	212	$	2,288	$	(11,298)
Comprehensive income statement presentation:
Change in fair value of derivatives and other	$	166	$	330	$	941	$	(1,412)
Unrealized cash flow hedge gains (losses)	(460)		(118)		1,347		(9,886)
Total change in fair value of interest rate derivatives	$	(294)	$	212	$	2,288	$	(11,298)

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Interest rate swaps $ 323
$ (1,477 ) $ (10,907 ) $ (7,679 )
Interest rate caps (111 ) (299 ) (391 ) (1,956 )
Total change in fair value of interest rate derivatives $ 212
$ (1,776 ) $ (11,298 ) $ (9,635 )
Comprehensive income statement presentation:
Change in fair value of interest rate derivatives $ 330
$ (529 ) $ (1,412 ) $ (3,926 )
Unrealized cash flow hedge losses (118 ) (1,247 ) (9,886 ) (5,709 )
Total change in fair value of interest rate derivatives $ 212
$ (1,776 ) $ (11,298 ) $ (9,635 )

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~~an 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 and shares of its 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock (the "Series A Preferred Stock") having an aggregate offering price of up to $300.0 million, to or through its sales agents and, with respect to shares of its common stock, may enter into separate forward sales agreements to or through the forward purchaser. ~~Upon commencing the ATM Program, the Company simultaneously terminated the Prior ATM Program.~~ During the ~~three~~nine months ended September 30, ~~2020,~~2021, the Company issued and sold ~~166,630~~2,118,670 shares of common stock at a weighted average price of ~~$10.16~~$13.21 per share under the ATM Program, receiving net proceeds, after offering costs and commissions, of ~~$1.7~~$27.4 million. During the nine months ended September 30, ~~2020,~~2021, the Company ~~issued and sold 653,357~~did not issue any shares of common stock at a weighted average price of $9.50 per share under the ATM Program, receiving net proceeds, after offering costs and commissions, of $6.1 million. During the three months ended September 30, 2020, the Company issued and sold 709,588 shares of the Series A Preferred Stock ~~at a weighted average price of $22.87 per share (inclusive of accrued dividends)~~ under the ATM Program, receiving net proceeds, after offering costs and commissions, of $16.0 million. During the nine months ended September 30, 2020, the Company issued and sold 713,418 shares of the Series A Preferred Stock at a weighted average price of $22.88 per share (inclusive of accrued dividends) under the ATM Program, receiving net proceeds, after offering costs and commissions, of $16.1 million.Program. Shares having an aggregate offering price of ~~$277.5~~$234.5 million remained unsold under the ATM Program as of November ~~3, 2020.~~2, 2021.

~~In connection with the ATM Program, on July 2, 2020, the Company filed, with the State Department~~

Table of Assessments and Taxation of the State of Maryland ("MSDAT"), Articles Supplementary to the Articles of Amendment and Restatement of the Company (the "Charter"), designating an additional 3,450,000 shares of the Company’s authorized preferred stock as shares of Series A Preferred Stock, resulting in a total of 6,380,000 shares classified as Series A Preferred Stock as of July 2, 2020. The Articles Supplementary became effective on July 2, 2020.Contents

On August 20, 2020, the Company sold 3,600,000 shares of its Series A Preferred Stock at a public offering price of $24.75 per share (inclusive of accrued dividends), for net proceeds, after the underwriting discount and offering expenses payable by the Company, of approximately $86.1 million, pursuant to a prospectus supplement, dated August 13, 2020, and a base prospectus dated March 9, 2020. The offering was a re-opening of the Company’s previous issuances of Series A Preferred Stock. The additional shares of Series A Preferred Stock sold in the offering form a single series, and are fully fungible, with the other outstanding shares of Series A Preferred Stock. The Company used the net proceeds to repay a portion of the outstanding borrowings under the Company’s unsecured revolving credit facility and for general corporate purposes.

In connection with the issuance of the Series A Preferred Stock, on August 20, 2020, the Operating Partnership issued to the Company 3,600,000 6.75% Series A Cumulative Redeemable Perpetual Preferred Units (the "Series A Preferred Units"), which have economic terms that are identical to the 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.

In connection with the offering, on August 17, 2020, the Company filed, with MSDAT, Articles Supplementary to the Charter, designating an additional 3,600,000 shares of the Company’s authorized preferred stock as shares of Series A Preferred Stock, resulting in a total of 9,980,000 shares classified as Series A Preferred Stock. The Articles Supplementary became effective upon filing with MSDAT.

Noncontrolling Interests

As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company held a ~~73.8%~~74.6% and ~~72.6%~~73.9% common interest in the Operating Partnership, respectively. As of September 30, ~~2020,~~2021, the Company also held a preferred interest in the Operating Partnership in the form of preferred units with a liquidation preference of $171.1 million. The Company is the primary

~~Table of Contents~~

beneficiary of the Operating Partnership as it has the power to direct the activities of the Operating Partnership and the rights to absorb ~~73.8%~~74.6% 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 September 30, ~~2020,~~2021, there were ~~20,522,484~~20,853,485 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 of ~~$0.5~~$0.6 million relates to the minority partners' interest in certain joint venture entities as of September 30, ~~2020, including Hoffler Place and Summit Place.~~2021. The noncontrolling interest for consolidated real estate entities was ~~$4.5~~$0.5 million as of December 31, ~~2019.~~2020.

In June 2020, the Company exercised its option to purchase the remaining 21% ownership interest in 1405 Point in exchange for increased ground lease payments to be made to an affiliate of the Company's joint venture partner. The Company recorded a note payable of $6.1 million, which represents the present value of these payments over the approximately 42-year remaining lease term. The $2.4 million difference between the present value of these payments and the extinguishment of the existing noncontrolling interest balance was recorded as an adjustment to additional paid-in capital.

On ~~July 1, 2020, due to the holders~~January 4, 2021, a holder of Class A Units ~~tendering an aggregate of 756,697~~tendered 12,000 Class A Units for redemption by the Operating Partnership, which the Company elected to satisfy ~~the redemption requests through the issuance of~~by issuing an equal number of shares of common stock.

Dividends and Distributions

During the nine months ended September 30, ~~2020,~~2021, the following dividends/distributions were declared or paid:

Equity type

Declaration Date

Record Date

Payment Date

Dividends per Share/Unit

Aggregate Dividends/Distributions on Stock and Units (in thousands)

Common Stock/Class A Units

11/10/2020

12/30/2020

01/07/2021

0.11

8,793

Common Stock/Class A Units

02/09/2021

03/31/2021

04/08/2021

0.15

12,112

Common Stock/Class A Units

05/03/2021

06/30/2021

07/08/2021

0.16

13,095

Common Stock/Class A Units

09/02/2021

09/29/2021

10/07/2021

0.16

13,148

Series A Preferred Stock

11/10/2020

01/04/2021

01/15/2021

0.421875

2,887

Series A Preferred Stock

02/09/2021

04/01/2021

04/15/2021

0.421875

2,887

Series A Preferred Stock

05/03/2021

07/01/2021

07/15/2021

0.421875

2,887

Series A Preferred Stock

09/02/2021

10/01/2021

10/15/2021

0.421875

2,887

Equity type Declaration Date Record Date Payment Date Dividends per Share/Unit Aggregate Dividends/Distributions on Stock and Units (in thousands)
Common Stock/Class A Units 11/06/2019 12/23/2019 01/02/2020 $ 0.21
$ 16,285
Common Stock/Class A Units 02/20/2020 03/25/2020 04/02/2020 0.22
17,108
Common Stock/Class A Units 07/30/2020 09/30/2020 10/08/2020 0.11
8,630
Series A Preferred Stock 11/06/2019 01/02/2020 01/15/2020 0.421875
1,067
Series A Preferred Stock 02/20/2020 04/01/2020 04/15/2020 0.421875
1,067
Series A Preferred Stock 04/30/2020 07/01/2020 07/15/2020 0.421875
1,175
Series A Preferred Stock 07/30/2020 10/01/2020 10/15/2020 0.421875
2,887

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 September 30, ~~2020,~~2021, there were ~~737,550~~608,441 shares available for issuance under the Equity Plan.

During the nine months ended September 30, ~~2020,~~2021, the Company granted an aggregate of ~~175,268~~165,685 shares of restricted stock to employees and non-employee directors with a weighted average grant date fair value of ~~$15.80~~$12.87 per share. Of those shares, ~~27,060~~43,646 were surrendered by the employees ~~and non-employee directors~~ for income tax withholdings. 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. Beginning with grants made in 2021, executive officers' restricted shares generally vest over a period of three years: two-fifths immediately on the grant date and the remaining three-fifths in equal amounts on the first three 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 nine months ended September 30, 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 nine months ended September 30, 2020, 10,600 shares were issued with a grant date fair value of $18.08 per share due to the partial vesting of performance units awarded to certain employees in 2017. Of those shares, 3,677 were surrendered by the employees and non-employee directors for income tax withholdings.

During the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the Company recognized $0.5 million and $0.5 million, respectively, of stock-based compensation cost. During the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the Company

recognized ~~$2.3~~$2.1 million and ~~$2.0~~$2.3 million, respectively, of stock-based compensation cost. As of September 30, ~~2020,~~2021, there were ~~167,602~~152,453 nonvested restricted shares outstanding; the total unrecognized compensation expense related to nonvested restricted shares was ~~$1.3~~$1.1 million, which the Company expects to recognize over the next 1830 months.

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.

The carrying amounts and fair values of the Company’s financial instruments as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 were as follows (in thousands):


	September 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Indebtedness, net (a)	$	1,018,547	$	1,037,473	$	963,845	$	980,714
Notes receivable, net	118,164		118,164		135,432		135,223
Interest rate swap liabilities	9,410		9,410		14,853		14,853
Interest rate swap and cap assets	361		361		90		90

September 30, 2020 December 31, 2019
Carrying
Value Fair
Value Carrying
Value Fair
Value
Indebtedness, net $ 886,509
$ 894,811
$ 950,537
$ 958,421
Notes receivable, net 168,716
167,853
159,371
159,371
Interest rate swap liabilities 16,470
16,470
7,720
7,720
Interest rate swap and cap assets 126
126
25
25
(a) The values as of September 30, 2021 include the loan reclassified to liabilities related to assets held for sale.

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 September 30, 2021 and 2020 was $4.1 million and $15.9 million, ~~and gross~~respectively. Gross profit from such contracts was $0.8 million and $0.6 ~~million.~~million for the three months ended September 30, 2021 and 2020, respectively. Revenue from construction contracts with these entities for the nine months ended September 30, 2021 and 2020 was $22.8 million and $35.4 million, ~~and gross~~respectively. Gross profit from such contracts was $1.5 million and $1.3 ~~million. There was no such revenue or gross profit~~million for the ~~three and~~ nine months ended September 30, ~~2019.~~2021 and 2020, respectively. As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, there was ~~$8.9~~$3.9 million and ~~$1.9~~$8.6 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 material for any of the three and nine months ended September 30, 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 material for any of the three and nine months ended September 30, 2020, and 2019.

The general contracting services described above include contracts with an aggregate price of ~~$80.7~~$81.8 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 ~~are projected to result in aggregate~~were substantially complete as of

September 30, 2021. Aggregate gross profit ~~of $3.1~~was projected at $3.8 million to the Company, representing a gross profit margin of ~~3.8%.~~4.9% as of September 30, 2021. 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 September 30, ~~2020.~~2021.

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)~~ten years of the completion of the Company’s initial public offering and formation transactions completed on May 13, 2013.

14. Commitments and Contingencies

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.

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~~As of September 30, ~~2020 (in thousands):~~2021, the Company had an outstanding payment guarantee for Interlock Commercial for $37.5 million. The Company has recorded a $1.6 million liability and corresponding addition to notes receivable relating to this guarantee.

Development project Payment guarantee amount
The Residences at Annapolis Junction $ 8,300
Delray Plaza 5,180
Interlock Commercial 34,300
Total $ 47,780

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 ~~$3.6~~$2.1 million and ~~$4.3~~$2.4 million as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. In addition, as of September 30, ~~2020,~~2021, 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~~On January 7, 2021, the Operating Partnership entered into a $15.0 million standby ~~letters~~letter of credit using the available capacity under the credit ~~facility. The letters~~facility to guarantee the funding of its investment in the Harbor Point Parcel 3 joint venture, which is the developer of T. Rowe Price's new global headquarters. This letter of credit ~~relate to the guarantee of future performance on certain of the Company’s construction contracts. Letters of credit generally are~~is available for draw down on the revolving credit facility in the event the Company does not ~~perform.~~meet its equity requirement.

Unfunded Loan Commitments

The Company has certain commitments related to its notes receivable investments that it may be required to fund in the future. The Company is generally obligated to fund these commitments at the request of the borrower or upon the occurrence of events outside of the Company's direct control. As of September 30, 2021, the Company had two notes receivable with commitments totaling approximately $6.6 million. If commitments are funded in the future, interest will be charged at rates consistent with the existing investments.

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.

On October 2, 2020, the Company acquired Edison Apartments, a multifamily property located in downtown Richmond, Virginia, for consideration comprised of 633,734 Class A Units, the assumption of a $16.4 million loan payable, and assumption of $1.8 million in other liabilities. The seller of the property was a partnership that includes several members from the Company's management team and board of directors.

In October ~~2020,~~2021, the Company ~~terminated the leases~~sold Courthouse 7-Eleven for ~~Regal Cinemas in Columbus Village II (part~~a contract price of ~~the Town Center~~$3.1 million. As of ~~Virginia Beach) and Harrisonburg, Virginia. The Company has written off the accounts receivable for this tenant as an adjustment to rental revenue totaling $1.1 million for the three months ended~~ September 30, ~~2020. The Company is evaluating potential uses~~2021, the property did not meet the criteria to be classified as held for ~~the existing buildings, as well as potential redevelopment concepts at each location, and will assess the recoverability of its investment in each of the buildings as part of this evaluation.~~sale.

In October ~~30, 2020,~~2021, the Company acquired 79% of the partnership that owns the Residences at Annapolis Junction. As part of this purchase, the Company extinguished its note receivable for this project and made a cash payment of $0.2 million. The partnership obtained a senior loan for $84.4borrowed $20.0 million which bears interest at a rate of the Secured Overnight Financing Rate ("SOFR") plus a margin of 2.66% and matures on November 1, 2030. As part of this financing transaction, the partnership also purchased an interest rate cap for $0.1 million with a SOFR strike rate of 1.84%, which expires on November 1, 2023.

~~Notes Receivable~~

On October 2, 2020, the Delray Plaza loan was modified to extend the maturity date of the loan to April 27, 2021. As a partial loan repayment, the borrower tendered 125,843 Class A Units that were pledged as collateral for this loan. The borrower also established a $2.5 million reserve account to be used for certain unpaid development project costs.

On October 2, 2020, the Interlock Commercial loan was modified to decrease the exit fee, subject to the satisfaction of certain conditions that reduce the Company's risk as a lender. The Company has reduced its estimate of exit fees to be collected and prospectively adjusted the recognition of the exit fee in interest income.

~~On October 6, 2020, the Company paid off the Sandbridge Commons loan in full. This property was added to the unencumbered borrowing base for~~under the revolving credit facility.

In October ~~2020,~~2021, the Company borrowed ~~$0.8~~$3.7 million on its construction loans to fund development activities.

On October 1, ~~2020,~~2021, due to the holders of Class A Units tendering an aggregate of ~~164,890~~220,000 Class A Units for redemption by the Operating Partnership, the Company elected to satisfy the redemption requests with an aggregate cash payment of ~~$1.5~~$2.9 million.

In October 2021, the Company sold an aggregate of 181,562 shares of common stock at a weighted average price of $13.56 per share under the ATM Program, receiving net proceeds, after offering costs and commissions, of $2.4 million.

On October ~~2, 2020,~~25, 2021, the Company ~~purchased the remaining 20% noncontrolling interest in the mixed-use development project in Roswell, Georgia in exchange for~~announced that its board of directors declared a cash ~~payment~~dividend of ~~$3.5 million and future consideration~~$0.17 per common share for the fourth quarter of ~~$1.5 million to~~2021. This represents a 6.25% increase over the prior quarter's cash dividend. The fourth quarter dividend will be ~~paid~~payable in cash ~~upon satisfaction~~on January 6, 2022 to stockholders of ~~certain conditions.~~record on December 29, 2021.

On October ~~8, 2020,~~25, 2021, the Company ~~paid~~announced that its board of directors declared a cash ~~dividends~~dividend of ~~$6.4 million to common stockholders, and the Operating Partnership paid cash distributions of $2.3 million to holders of Class A Units other than the Company.~~

~~On October 15, 2020, the Company paid cash dividends of $2.9 million to holders of shares~~$0.421875 per share of Series A Preferred ~~Stock.~~

Stock for the fourth quarter of 2021. The dividend will be payable in cash on January 14, 2022 to stockholders of record on January 3, 2022.

Table of Contents

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 continuing impacts of the novel coronavirus ("COVID-19") pandemic, including a possible resurgence, ~~and~~ measures intended to prevent or mitigate its spread, the timing or effectiveness of vaccines or other treatments, 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 and the ability of our tenants to access funding under government programs designed to provide financial relief for U.S. businesses in light of the COVID-19 pandemic;~~

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

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

•continuing adverse economic or real estate developments, either nationally or in the markets in which our properties are located, including as a result of the 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;

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•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;

•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 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, ~~and in our Quarterly Reports on Form 10-Q for the three months ended March 31, 2020 and June 30, 2020,~~ as well as risks, uncertainties and other factors discussed in this Quarterly Report on Form 10-Q, and 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~~vertically-integrated, self-managed REIT with ~~extensive~~four decades of experience developing, building, ~~owning~~acquiring and managing high-quality ~~institutional-grade~~ office, retail and multifamily properties ~~in attractive markets~~located primarily ~~throughout~~in the Mid-Atlantic and Southeastern United States. We also provide general construction and development services to third-party clients, in addition to developing and building properties to be placed in our stabilized portfolio. As of September 30, ~~2020,~~2021, our 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~~	%
~~Apex Entertainment~~	~~Retail~~	Virginia Beach, 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~~	%
~~Commerce Street Retail~~	~~Retail~~	Virginia Beach, Virginia*	~~100~~	%
~~Courthouse 7-Eleven~~	~~Retail~~	~~Virginia Beach, Virginia~~	~~100~~	%

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

Apex Entertainment

Retail

Virginia Beach, Virginia*

100

Broad Creek Shopping Center

Retail

Norfolk, Virginia

100

Broadmoor Plaza

Retail

South Bend, Indiana

100

Brooks Crossing Retail

Retail

Newport News, Virginia

(1)

Columbus Village

Retail

Virginia Beach, Virginia*

100

Columbus Village II

Retail

Virginia Beach, Virginia*

100

Commerce Street Retail

Retail

Virginia Beach, Virginia*

100

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~~Property~~	~~Segment~~	~~Location~~	~~Ownership Interest~~
~~Dimmock Square~~	~~Retail~~	~~Colonial Heights, Virginia~~	~~100~~	%
~~Fountain Plaza Retail~~	~~Retail~~	Virginia Beach, Virginia*	~~100~~	%
~~Greentree Shopping Center~~	~~Retail~~	~~Chesapeake, Virginia~~	~~100~~	%
~~Hanbury Village~~	~~Retail~~	~~Chesapeake, Virginia~~	~~100~~	%
~~Harrisonburg Regal~~	~~Retail~~	~~Harrisonburg, Virginia~~	~~100~~	%
~~Lexington Square~~	~~Retail~~	~~Lexington, South Carolina~~	~~100~~	%
~~Market at Mill Creek~~ ⁽¹⁾	~~Retail~~	~~Mount Pleasant, South Carolina~~	70	%
~~Marketplace at Hilltop~~	~~Retail~~	~~Virginia Beach, Virginia~~	~~100~~	%
~~Nexton Square~~	~~Retail~~	~~Summerville, South Carolina~~	~~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~~	%
~~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~~	%
~~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~~	~~100~~	%
~~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~~	%
~~The Cosmopolitan~~	~~Multifamily~~	Virginia Beach, Virginia*	~~100~~	%


Property	Segment	Location	Ownership Interest
Courthouse 7-Eleven	Retail	Virginia Beach, Virginia	100	%	(2)
Delray Beach Plaza	Retail	Delray Beach, Florida	100	%
Dimmock Square	Retail	Colonial Heights, Virginia	100	%
Fountain Plaza Retail	Retail	Virginia Beach, Virginia*	100	%
Greenbrier Square	Retail	Chesapeake, Virginia	100	%
Greentree Shopping Center	Retail	Chesapeake, Virginia	100	%
Hanbury Village	Retail	Chesapeake, Virginia	100	%
Harrisonburg Regal	Retail	Harrisonburg, Virginia	100	%
Lexington Square	Retail	Lexington, South Carolina	100	%
Market at Mill Creek	Retail	Mount Pleasant, South Carolina	70	%	(1)
Marketplace at Hilltop	Retail	Virginia Beach, Virginia	100	%
Nexton Square	Retail	Summerville, South Carolina	100	%
North Hampton Market	Retail	Taylors, South Carolina	100	%
North Point Center	Retail	Durham, North Carolina	100	%
Overlook Village	Retail	Asheville, North Carolina	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	%
Premier Retail	Retail	Virginia Beach, Virginia*	100	%
Providence Plaza	Retail	Charlotte, North Carolina	100	%
Red Mill Commons	Retail	Virginia Beach, Virginia	100	%
Sandbridge Commons	Retail	Virginia Beach, Virginia	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	%
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	100	%
Edison Apartments	Multifamily	Richmond, Virginia	100	%
Encore Apartments	Multifamily	Virginia Beach, Virginia*	100	%
Greenside Apartments	Multifamily	Charlotte, North Carolina	100	%
Hoffler Place	Multifamily	Charleston, South Carolina	100	%
Johns Hopkins Village	Multifamily	Baltimore, Maryland	100	%	(3)
Liberty Apartments	Multifamily	Newport News, Virginia	100	%
Premier Apartments	Multifamily	Virginia Beach, Virginia*	100	%
Smith's Landing	Multifamily	Blacksburg, Virginia	100	%
Summit Place	Multifamily	Charleston, South Carolina	100	%
The Cosmopolitan	Multifamily	Virginia Beach, Virginia*	100	%
The Residences at Annapolis Junction	Multifamily	Annapolis Junction, Maryland	79	%	(1)

*Located in the Town Center of Virginia Beach

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

(2) Sold on October 28, 2021.

(3) Held for sale as of September 30, 2021.

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As of September 30, ~~2020,~~2021, 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~~	%
~~Premier Retail~~	~~Retail~~	Virginia Beach, Virginia*	~~100~~	%
~~Summit Place~~	~~Multifamily~~	~~Charleston, South Carolina~~	90	%
~~Solis Gainesville~~	~~Multifamily~~	~~Gainesville, Georgia~~	95	%

Property

Segment

Location

Ownership Interest

Wills Wharf

Office

Baltimore, Maryland

100

Chronicle Mill

Multifamily

Belmont, North Carolina

(1)

Gainesville Apartments

Multifamily

Gainesville, Georgia

(1)(2)

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

(2) We are required to purchase our joint venture partner's ownership interest after completion of the ~~Town Center~~project, contingent upon obtaining a certificate of ~~Virginia Beach~~occupancy and achieving certain thresholds of net operating income.

Acquisitions

On ~~January 10, 2020,~~February 26, 2021, we ~~purchased land~~acquired Delray Beach Plaza, a Whole Foods-anchored retail property located in ~~Charlotte, North Carolina~~Delray Beach, Florida, for a ~~purchase~~contract price of ~~$6.3~~$27.6 million ~~for~~plus capitalized transaction costs of $0.2 million. As a part of this transaction, the ~~development of a mixed-use property.~~

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

~~On August 31, 2020, we purchased land in Gainesville, Georgia for a purchase price of $5.0 million for the development of a mixed-use property.~~

~~On September 22, 2020, we exercised our option to purchase Nexton Square for $17.9 million cash and the assumption of a note payable of $22.9 million. The~~ developer of this property repaid our mezzanine note receivable of ~~$16.4~~$14.3 million at the time of the acquisition.

On ~~October 2, 2020,~~June 28, 2021, we ~~acquired Edison Apartments, a multifamily building located~~purchased the remaining 7.5% ownership interest in ~~downtown Richmond, Virginia,~~Hoffler Place for consideration comprised of 633,734 Class A Units, the assumption of a $16.4 million loan payable, and the assumption of $1.8 million in other assets and liabilities. The seller of the property was a partnership that includes several members from our management team and board of directors.

~~On October 30, 2020, we acquired 79% of the partnership that owns the Residences at Annapolis Junction. As part of this purchase, we extinguished the note receivable for this project and made~~ a cash payment of ~~$0.2 million. The partnership refinanced the senior loan for $84.4~~$0.3 million.

On June 28, 2021, we purchased the remaining 10% ownership interest in Summit Place for a cash payment of $0.5 million.

On July 28, 2021, we acquired Overlook Village, a retail center in Asheville, North Carolina, for a contract price of $28.3 million plus capitalized acquisition costs of $0.1 million.

On August 24, 2021, we acquired Greenbrier Square, a Kroger-anchored retail center in Chesapeake, Virginia, for total consideration of $36.5 million plus capitalized acquisition costs of $0.3 million. As a part of this acquisition, we assumed a note payable of $20.0 million.

Dispositions

On May 29, 2020, we sold a portfolio of seven retail properties for $90.0 million. The portfolio consisted of Alexander Pointe, Bermuda Crossroads, Gainsborough Square, Harper Hill Commons, Indian Lakes Crossing, Renaissance Square, and Stone House Square. The gain on sale was $2.8 million. In connection with the sale of this portfolio, we repaid $61.9 million on the revolving credit facility, resulting in net proceeds of $25.9 million.

~~On September 1, 2020,~~January 4, 2021, we completed the sale of the ~~Walgreen's~~7-Eleven outparcel at Hanbury ~~Village. Net proceeds after the transaction costs were $7.0~~Village for a sale price of $2.9 million. The gain on disposition was ~~$3.6~~$2.4 million.

On January 14, 2021, we completed the sale of a land outparcel at Nexton Square for a sale price of $0.9 million. There was no gain or loss on the disposition.

On March 16, 2021, we completed the sale of Oakland Marketplace for a sale price of $5.5 million. The gain on disposition was $1.1 million.

On March 18, 2021, we completed the sale of easement rights at Courthouse 7-Eleven for a sale price of $0.3 million. The gain on disposition was $0.2 million.

In October 2021, we completed the sale of Courthouse 7-Eleven for a contract price of $3.1 million.

Impairment and Disposal of Real Estate

During the three months ended March 31, 2021, we recognized impairment of real estate of $3.0 million related to the Socastee Commons shopping center in Myrtle Beach, South Carolina. We anticipated a decline in cash flows due to the expiration of the anchor tenant lease. We had not re-leased the anchor tenant space and had determined that it was not probable that this space would be leased in the near future at rates sufficient to recover our investment in the property. We recorded an impairment loss equal to the excess of the book value of the property’s assets over the estimated fair value of the property during the first quarter of 2021. On August 25, 2021, we completed the sale of Socastee Commons for a price of $3.8 million. The loss on disposition was $0.1 million.

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Unconsolidated joint ventures

During December 2020, we formed a 50/50 joint venture that will develop and build T. Rowe Price's new global headquarters in Baltimore's Harbor Point. Plans for this development are preliminary and will evolve during the next several quarters. T. Rowe Price agreed to a 15-year lease and plans to relocate its downtown Baltimore operations in the first half of 2024 to a facility in Harbor Point that is planned to contain at least 450,000 square feet of office space. Project costs are currently estimated at $250 million. When a construction loan is obtained, we will be expected to provide completion guarantees and a partial payment guarantee to the lender for this project.

In conjunction with this build-to-suit project, another joint venture will develop and build a new mixed-use facility with 310 apartments units, 15,000 square feet of retail space, and 1,300 spaces of structured parking on a neighboring site to accommodate T. Rowe Price's parking requirements and other parking requirements for the surrounding area. Plans for this project are also preliminary and will evolve during the next several quarters. Estimated project costs are $192 million, and the terms of this joint venture are currently being negotiated. We anticipate that this will be a 50/50 joint venture. When a construction loan is obtained, we will be expected to provide completion guarantees and a partial payment guarantee to the lender for this project.

Under current plans and estimates, our equity requirement combined for the two projects would be $60 million. We anticipate breaking ground in early 2022 for both projects.

Development Business update

As of September 30, 2021, the Wills Wharf project is substantially complete and approximately 60% leased. We plan to lease the remaining space by early 2022.

We commenced construction on the Chronicle Mill multifamily project in the first quarter of 2021. Our project costs are estimated at $55.0 million, of which $35.1 million will be funded with a construction loan, which was originated on May 5, 2021. We expect to deliver this project beginning in the third quarter of 2022.

Mezzanine Lending Program updates

We are monitoring the completion and stabilization plans for the projects associated with our mezzanine loans, and the projected sales proceeds from these projects continue to support the full collection of our principal and interest upon the sale of these projects. The development projects securing our mezzanine loans had the following activity during the quarter:

Interlock Commercial: Construction is substantially complete. Certain tenant improvements remain to be completed and are expected to be delivered during the remainder of 2021 and 2022. In September 2021, the loan was modified to increase the maximum loan commitment to $107.0 million and to modify and clarify certain rights and responsibilities under the loan.

Nexton Multifamily: We funded the first $17.9 million of this investment during the nine months ended September 30, 2021. Our total loan commitment is $22.3 million.

We continue to monitor leasing activity at these projects, as applicable, and will monitor the impact of the COVID-19 pandemic on leasing activity and development activity at each of these projects.

Impact of COVID-19 on our Business

Overview

~~In light of the changing nature~~The extent of the COVID-19 ~~pandemic and uncertainty regarding~~pandemic’s effect on our business activity will depend on future developments, including the duration ~~severity,~~ and ~~possible resurgence~~intensity of the pandemic, ~~in future periods,~~ the ~~impact that~~timing, administration and effectiveness of COVID-19 vaccines (including against COVID-19 variant strains), and the duration of, or the reinstatement of, government measures to mitigate the pandemic or address its effects, all of which are uncertain and difficult to predict. Due to the uncertainty surrounding the COVID-19 pandemic, ~~will have~~we are not able at this time to estimate the full effect of these factors on our ~~business is currently unknown and unquantifiable.~~business. 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 us and many of our 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~~we might need to re-assess and consider modifying ~~their~~our operating ~~models,~~model, underwriting

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criteria, and liquidity position to mitigate the impacts of future economic downturns, including as a result of ~~the potential~~a future resurgence of ~~the~~ COVID-19 ~~pandemic in future months,~~cases, the timing, severity, and duration of which cannot be predicted.

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We anticipate that the global health crisis caused by COVID-19 and the related ~~actions~~responses 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 form of business closures or significantly limited operations ~~at certain times~~for periods of time in our retail portfolio, with the exception of tenants operating in certain "essential" businesses, which 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~~While operations in many areas have been allowed to ~~continue~~fully or partially re-open, no assurance can be given that such closures or restrictions will not be reinstituted 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 containment efforts deployed by various national, state, and local governments, we anticipate a rebound in economic activity, although we are unable to predict the nature, timing, and sustainability of an economic recovery.future.

In an effort to protect the health and safety of our employees, as part of our initial response to the COVID-19 pandemic, 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 during certain periods of time, which was greatly assisted by recent enhancements to our IT systems; limiting the number of employees attending in-person meetings; implementing limitations on 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 temporarily suspended the payment of quarterly cash dividends on shares of our common stock and Class A common units for the second quarter of 2020. As a result of improvement in general economic conditions and the Company’s operating performance, our Board of Directors reinstated quarterly cash dividends on shares of our common stock and Class A common units with a cash dividend of $0.11 per share and unit, for the third quarter of 2020, which was paid on October 8, 2020 to stockholders and OP unitholders of record on September 30, 2020.

In addition, Lou Haddad, our President and Chief Executive Officer, voluntarily elected to reduce his base compensation by 25%, and each of our directors, including Dan Hoffler and 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 our tenants, property managers, and vendors, and, where appropriate, have provided guidance relating to the availability of government relief programs that could support our tenants’ businesses. In response to the market and industry trends, we also have pursued ~~and expect to 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 certain acquisition activity, 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~~2021 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 and subsequent legislation, including our eligibility and our~~

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~~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 totaling $0.6 million that would otherwise have been owed from the date of enactment of the CARES Act through December 31, 2020. Congress passed the Consolidated Appropriations Act, 2021 in December 2020, and the American Rescue Plan Act of 2021 in March 2021, which include second and third economic stimulus packages, respectively, to address the impact of the COVID-19 pandemic. We continue to assess the potential impacts of the current federal stimulus and relief legislation and any subsequent legislation, including our eligibility and our tenants for funding under programs designed to provide financial assistance to U.S. businesses.

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.

~~Operating Property Portfolio~~

~~Office Tenants~~

As of October 27, 2020, we had collected 100% of office tenant rent due for the third quarter of 2020 and 100% of office tenant rent for October 2020. Data reported corresponds to tenant type and does not correspond to the reporting segment classification of the properties as a whole.

In June 2020, following discussion with WeWork, we agreed to terminate the lease of the top two office floors of Wills Wharf in Harbor Point, prior to our funding any tenant improvements. We received a termination fee of $1.3 million, including a $1.0 million reimbursement of legal and leasing fees.

~~Retail Tenants~~

In an effort to contain COVID-19 or slow its spread, state and local governments have enacted various measures at various times, 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 in-person 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.

In October 2020, we terminated the leases for Regal Cinemas in Columbus Village II (part of the Town Center of Virginia Beach) and Harrisonburg, Virginia. We are evaluating potential uses for the existing buildings as well as potential redevelopment concepts at each location. We wrote off the accounts receivable for this tenant as an adjustment to rental revenue totaling $1.1 million for the three months ended September 30, 2020.

As of October 27, 2020, we had collected 93% of retail tenant rent due for the third quarter of 2020 and 94% of retail tenant rent due for October 2020. The October collections exclude rent due from the two subsequently terminated leases with Regal Cinemas. In addition to the amounts recorded for Regal Cinemas, the company recorded $0.4 million in bad debt charges for the three months ended September 30, 2020, which is recorded as an adjustment to rental revenues and was primarily the result of retail tenant delinquencies resulting from the COVID-19 pandemic.

~~As of September 30, 2020, we had the following significant known lease terminations:~~

Tenant Property Effective Date SF Impact ABR Impact ABR per Leased SF
Bed, Bath, & Beyond North Point Center 1/31/2021 30,000
$ 300,000
$ 10.00
Bed, Bath, & Beyond Wendover Village 1/31/2021 33,696
404,352
12.00
Regal Cinemas ^(a)
Columbus Village II 10/20/2020 51,545
995,334
19.31
Regal Cinemas ^(a)
Harrisonburg Regal 10/25/2020 49,000
717,850
14.65
Bi-Lo ^(a)
Socastee Commons 1/31/2021 46,673
492,400
10.55
Total/Weighted Average 210,914
$ 2,909,936
$ 13.80

~~(a) Vacancy allows the Company to consider redevelopment of this property.~~

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Multifamily ~~Tenants~~Portfolio Residential Eviction Restrictions

As of October 27, 2020, we had collected 98% of multifamily tenant rent due for the third quarter of 2020 and 97% of multifamily tenant rent due for October 2020. Data reported corresponds to tenant type and does not correspond to the reporting segment classification of the properties as a whole.

Due to actions taken by state governments and limited working capacity for government courts and agencies, certain properties in our multifamily portfolio were subject to increased restrictions that limited our ability to evict tenants or charge

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late fees through September 30, ~~2020.~~2021. At this time, certain restrictions previously in place have been lifted and many government courts and agencies have re-opened; however, there may be similar restrictions and limited working capacity for government courts and agencies in the future.

On September 4, 2020, the Centers for Disease Control and Prevention (the "CDC") issued ana nationwide order to temporarily halt residential evictions to prevent the further spread of COVID-19, ~~that~~which effectively ~~prohibits~~prohibited evictions for nonpayment through ~~December 31, 2020 nationwide~~June 30, 2021 for residential tenants who ~~submit a signed copy of a declaration form~~satisfied certain conditions. Subsequent to ~~their landlords. The specific declaration form to be used was prepared by~~the initial order, the CDC ~~and attached~~extended the expiration date of the eviction moratorium from June 30, 2021 to ~~the order.~~October 3, 2021. The CDC's order ~~does~~did not, on its own, prevent landlords from filing suits, obtaining judgments, or filing ~~writs. It~~writs; rather, the order only ~~prevents~~prevented landlords from carrying out evictions if the tenant ~~submits~~submitted the signed declaration form to the landlord. If the tenant ~~does~~did not ~~provide~~satisfy the ~~declaration,~~applicable conditions, the tenant ~~can~~could be evicted. The order ~~does~~did not apply to evictions that ~~are~~were for reasons other than nonpayment of rent. The penalties for an organization that ~~violates~~violated the order include fines of up to ~~$200,000.00~~$200,000 per event ($~~500,000.00~~500,000 if the eviction results in death). The order ~~does~~did not relieve any individual of any obligation to pay rent or comply with any other obligation under a lease, nor ~~does~~did it preclude the charging or collecting of fees, penalties, or interest as a result of the failure to pay rent under the terms of a lease. The order ~~does~~did not apply to commercial tenants.

As of the date of this filing, all residential landlords filing an eviction action in the State of North Carolina and South Carolina are no longer obligated to provide tenants a blank CDC Declaration form. The “One CDC Declaration per Household” and the requirement of the "5 day deadline to notify the Court of a CDC Declaration" rules are no longer in effect as well. If the landlord receives a completed Declaration form from the tenant, the landlord may not proceed to request a writ of possession. Evictions for reasons other than nonpayment of rent are not prohibited. These conditions apply to Greenside Apartments, Hoffler Place and Summit Place.

State and local restrictions that remain in place for 1405 Point and Johns Hopkins Village, both located in Baltimore, Maryland, and for the Residences at Annapolis Junction, located in Howard County, Maryland are detailed below:

•

•City restrictions in place which prohibitrent increases, notices of increases, or assessment of late fees during the Maryland state of emergency. These restrictions will be in place until the governor's state of emergency is lifted and for ninety (90) days thereafter.

•rent increases, notices of increases, or assessment of late fees during the Maryland state of emergency. These restrictions will be in place until the governor's state of emergency is lifted and for ninety (90) days thereafter.

State restrictions in place which prohibit evictions of tenants affected by COVID-19. Evictions cannot be processed until the state of emergency is terminated and the catastrophic health emergency is rescinded. The governor’s state of emergency order was renewed again on July ~~31, 2020.~~12, 2021.

On October 30, 2020, the Company acquired 79% of the partnership that owns the Residences at Annapolis Junction. The same restrictions listed above for our properties in Baltimore, Maryland also apply to this property.

Furthermore, the restriction on evictions in the State of Maryland applies to both our commercial and residential properties located in that state.

~~Construction~~In Virginia, residential landlord-tenant law has been changing rapidly over the past few months. On June 30, 2021, Virginia’s COVID-19 state of emergency expired, lifting a set of restrictions on evictions enabling non-paying residents to continue cases for 60 days (if residents could prove non-payment was due to COVID-19) and ~~Development Business~~

Asrequiring landlords to apply for rental assistance on behalf of tenants through the Virginia Rent Relief Program (RRP). Following the expiration of the ~~date~~Virginia state of ~~this quarterly report~~emergency, the United States Supreme Court ruled on ~~Form 10-Q, all~~August 26, 2021 to end a temporary stay on a lower court ruling seeking to overturn a federal eviction moratorium issued by the Centers for Disease Control and Prevention (CDC). In doing so, the Supreme Court’s ruling invalidated the federal eviction moratorium.

While the CDC eviction moratorium is no longer in effect, the Virginia General Assembly passed a new set of ~~our construction jobsites~~extended protections that went into effect on August 10, 2021 and will remain ~~open~~in effect until June 30, 2022. Before terminating the rental agreement 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 September 30, 2020, we had a third-party construction backlog of approximately $122.7 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 project was completed in June 2020, and portions of the Wills Wharf project were completed during the second quarter of 2020. The Wills Wharf project has 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:~~

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~~Delray Plaza:~~ ~~Effective April 1, 2020, we stopped recognizing interest on this loan for accounting purposes since collection of additional interest accruals was less certain. We are negotiating a purchase~~seeking possession of the property, ~~from~~ the ~~developer.~~

~~The Residences at Annapolis Junction:~~ ~~On October 30, 2020, we purchased 79% of~~extended protections require landlords owning more than four (4) dwelling units to serve a 14-day pay or quit notice instructing the ~~partnership that owns this project and extinguished our note receivable.~~

~~Nexton Square:~~ ~~We exercised our~~tenant to either pay in full or enter into an acceptable payment plan within the 14-day cure period. Tenants may only use the payment plan option ~~to purchase Nexton Square on September 22, 2020. The mezzanine loan was repaid as part of this purchase.~~

~~Solis Apartments at Interlock:~~ ~~This project is estimated to be completed~~one time during the ~~second quarter~~length of ~~2021. Current estimates~~a rental agreement. If a tenant defaults on a payment plan, landlords must send a subsequent 14-day notice demanding payment in full. Pay or quit notices no longer require language regarding the Virginia state of ~~future operating results~~emergency, and ~~projected sales proceeds from this project continue~~the mandate on landlords to ~~support the full collection~~apply for RRP on behalf of ~~our principal and interest upon sale of the project.~~a tenant no longer exists.

~~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 $8.0 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. On October 2, 2020, we modified the loan to decrease the exit fee upon satisfaction of certain conditions that reduce our risk as a lender.

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.

Third Quarter ~~2020~~2021 and Recent Highlights

The following highlights our results of operations and significant transactions for the three months ended September 30, ~~2020~~2021 and other recent developments:

•Net income attributable to common stockholders and OP ~~Unit holders~~Unitholders of ~~$8.7~~$4.9 million, or ~~$0.11~~$0.06 per diluted share, compared to ~~$9.9~~$8.7 million, or ~~$0.13~~$0.11 per diluted share, for the three months ended September 30, ~~2019.~~ 2020.

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•Funds from operations attributable to common stockholders and OP ~~Unit holders~~Unitholders ("FFO") of ~~$19.2~~$21.9 million, or ~~$0.24~~$0.27 per diluted share, compared to ~~$21.7~~$19.2 million, or ~~$0.29~~$0.24 per diluted share, for the three months ended September 30, ~~2019.~~2020. See "Non-GAAP Financial Measures."

•Normalized funds from operations available to common stockholders and OP ~~Unit holders~~Unitholders ("Normalized FFO") of ~~$19.0~~$21.5 million, or ~~$0.24~~$0.26 per diluted share, compared to ~~$22.5~~$19.0 million, or ~~$0.30~~$0.24 per diluted share, for the three months ended September 30, ~~2019.~~2020. See "Non-GAAP Financial Measures."

~~Recaptured two prime redevelopment sites - 3 acres~~•Announced a fourth quarter cash dividend of $0.17 per common share, resulting in the ~~Town Center of Virginia Beach~~third quarterly increase this year, a 6.25% increase over the prior quarter's dividend, and ~~nearly 10 acres adjacent to James Madison University in Harrisonburg, Virginia - after terminating leases with Regal Cinemas upon tenant default.~~a 54.5% cumulative increase year-to-date.

~~Core~~•Stabilized operating property portfolio occupancy ~~at 95.4%~~increased to 96.4% as of September 30, ~~2020 compared to 93.6% as of June 30, 2020. The Company's September 30, 2020~~2021. Office occupancy ~~includes office at 96.7%~~was 96.9%, retail ~~at 94.2%~~occupancy was 95.2%, and multifamily occupancy was 97.4%.

•Leased 90,000 square feet of commercial office and retail space since the Company’s previous quarterly update, including 36,000 square feet at ~~95.9%.~~Wills Wharf.

~~Collected 96%~~•Announced the commencement of ~~portfolio rents for the third quarter, including 100% of office tenant rents, 98% of multifamily tenant rents, and 93% of retail tenant rents.~~

~~Collected 96% of October portfolio rents, including 100% of office tenant rents, 97% of multifamily tenant rents, and 94% of retail tenant rents.~~

~~Announced~~construction at a ~~new~~mixed-use development project, ~~Solis Gainesville, a $52 million 223-unit multifamily project~~Southern Post in ~~downtown Gainesville, Georgia.~~Roswell, Georgia, by the end of 2021.

~~Ended the third quarter with $122.7 million of third-party construction backlog.~~

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•	~~Acquired Nexton Square, a 118,000 square foot open air lifestyle center in Summerville, South Carolina in an off-market transaction.~~


•	~~Acquired partner's 20% ownership interest of the Southern Post project in Roswell, Georgia resulting in 100% ownership of the partnership.~~

Raised $86.3 million of net proceeds before offering expenses through an underwritten public offering of 3,600,000 shares of 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock at a public offering price of $24.75 per share.

~~Completed the acquisition of the Edison Apartments in downtown Richmond, Virginia in an off-market, OP Unit transaction.~~

Completed the off-market acquisition of ~~The Residences at Annapolis Junction,~~Greenbrier Square, a ~~416-unit, Class A, LEED Gold certified mid-rise apartment community~~Kroger-anchored retail center in ~~Howard County, Maryland.~~Chesapeake, VA.

•Completed the off-market acquisition of Overlook Village, a 150,000 square foot retail center in Asheville, NC anchored by T.J. Maxx | Homegoods and Ross.

Segment Results of Operations

As of September 30, ~~2020,~~2021, 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 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.~~income, the most directly comparable GAAP measure.

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.

Office Segment Data

Office rental revenues, property expenses, and NOI for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021		2020		Change		2021		2020		Change
Rental revenues	$	11,933	$	11,456	$	477	$	35,324	$	32,142	$	3,182
Property expenses	4,956		4,417		539		13,540		11,628		1,912
Segment NOI	$	6,977	$	7,039	$	(62)	$	21,784	$	20,514	$	1,270

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 Change 2020 2019 Change
Rental revenues $ 11,456
$ 10,283
$ 1,173
$ 32,142
$ 23,221
$ 8,921
Property expenses 4,417
3,894
523
11,628
8,412
3,216
Segment NOI $ 7,039
$ 6,389
$ 650
$ 20,514
$ 14,809
$ 5,705

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Office segment NOI for the three ~~and nine~~ months ended September 30, ~~2020 increased 10.2% and 38.5%, respectively, compared to the corresponding periods in 2019. The increase for~~2021 was materially consistent with the three months ended September 30, ~~2020 relates primarily to the commencement of operations at a portion of Wills Wharf in June~~ 2020. ~~In addition, 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 contributed to the increase~~segment NOI for the nine months ended September 30, ~~2020.~~2021 increased 6.2% compared to the nine months ended September 30, 2020 primarily due to the Wills Wharf property that was placed into service beginning in June 2020, which was partially offset by higher real estate tax assessments at several properties.

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Office Same Store Results

Office same store results for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 exclude Wills Wharf (placed in service in June 2020). In addition, office same store results for the nine months ended September 30, 2020 and 2019 exclude Brooks Crossing Office, Thames Street Wharf, and One City Center (acquired in March 2019).Wharf.

Office same store rental revenues, property expenses, and NOI for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows (in thousands):


	Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019			Change			2020		2019		Change				2021		2020		Change		2021		2020		Change
Rental revenues	$	10,232	$	10,283		$	(51	)	$	15,812	$	16,148	$	(336	)	Rental revenues	$	10,252	$	10,232	$	20	$	30,752	$	30,253	$	499
Property expenses	3,648		3,739			(91		)	5,810		5,798		12			Property expenses	3,825		3,648		177		10,837		10,441		396
Same Store NOI	$	6,584	$	6,544		$	40		$	10,002	$	10,350	$	(348	)	Same Store NOI	$	6,427	$	6,584	$	(157)	$	19,915	$	19,812	$	103
Non-Same Store NOI	455		(155		)	610			10,512		4,459		6,053			Non-Same Store NOI	550		455		95		1,869		702		1,167
Segment NOI	$	7,039	$	6,389		$	650		$	20,514	$	14,809	$	5,705		Segment NOI	$	6,977	$	7,039	$	(62)	$	21,784	$	20,514	$	1,270

Office same store NOI for the three months ended September 30, ~~2020 increased 0.6%~~2021 decreased 2.4% compared to the three months ended September 30, ~~2019. The increase relates~~2020 primarily due to ~~increased occupancy across~~increases in certain operating expenses that were not fully recovered from certain tenants due to the ~~same store portfolio.~~terms of their leases. Office same store NOI for the nine months ended September 30, ~~2020 decreased 3.4% compared to~~2021 was materially consistent with the nine months ended September 30, 2019. The decrease relates primarily to 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 that 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 portfolio.2020.

Retail rental revenues, property expenses, and NOI for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows (in thousands):

Retail segment NOI for the three and nine months ended September 30, ~~2020 decreased 27.3%~~2021 increased 32.1% and ~~4.9%~~3.8%, respectively, compared to the corresponding periods in ~~2019.~~2020. The ~~decreases~~increases relate primarily to the acquisitions of Nexton Square, Delray Beach Plaza, Overlook Village, and Greenbrier Square along with the completion of the redevelopment at Apex Entertainment. Additionally, NOI has increased for Columbus Village II and Harrisonburg Regal due to higher rental revenue received from Regal Cinemas. These increases were partially offset by the disposition of the seven-property retail portfolio in May 2020 and our decision to terminate the leases for Regal Cinemas in Columbus Village II (part of the Town Center of Virginia Beach) and Harrisonburg. The Company has written off the accounts receivable for this tenant as an adjustment to rental revenue totaling $1.1 million. The Company is evaluating potential uses for the existing buildings as well as ~~potential redevelopment concepts~~Oakland Marketplace and Socastee Commons. Additionally, Bed Bath & Beyond terminated their leases at ~~each location~~North Point and will assess the recoverability of its investment in each of the buildings as part of this evaluation. In addition to the amounts recorded for Regal Cinemas, the Company recognized a $0.4 million and $1.3 million increase in the allowance for bad debt (recorded as an adjustment to rental revenues) as a result of the COVID-19 pandemic for the three and nine months ended September 30, 2020, respectively, compared to the corresponding periods in 2019. The decrease for the nine months ended September 30, 2020 was partially offset by 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.Wendover Village.

Retail Same Store Results

Retail same store results for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 exclude Apex Entertainment, ~~(formerly Dick’s at Town Center) due to redevelopment, Brooks Crossing Retail, Premier Retail, Columbus Village (due to redevelopment), Lightfoot Marketplace (disposed in August 2019),~~Delray Beach Plaza, Greenbrier Square, Nexton Square, ~~(acquired in~~Overlook Village, and Premier Retail. In addition, retail same store results for the three and nine months ended September ~~2020),~~30, 2021 and 2020 exclude the seven-property retail portfolio that was disposed in May 2020 (Alexander Pointe, Bermuda Crossroads, Gainsborough Square, Harper Hill Commons, Indian Lakes Crossing, Renaissance Square, and Stone House Square)~~. In addition, retail same store results for the nine months ended September 30, 2020~~ and ~~2019 exclude Market at Mill Creek,~~Oakland Marketplace ~~at Hilltop~~ and ~~Red Mill~~Socastee Commons, ~~(acquired~~each of which were disposed in ~~May 2019), Waynesboro Commons (disposed in April 2019), and the additional outparcel phase~~2021.

Table of ~~Wendover Village.~~Contents

Retail same store rental revenues, property expenses, and NOI for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows (in thousands):


	Three Months Ended September 30,							Nine Months Ended September 30,								Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		Change			2020		2019		Change				2021		2020		Change		2021		2020		Change
Rental revenues	$	14,530	$	16,686	$	(2,156	)	$	36,656	$	39,019	$	(2,363	)	Rental revenues	$	16,317	$	14,586	$	1,731	$	47,976	$	47,224	$	752
Property expenses	3,930		4,057		(127		)	9,231		9,450		(219		)	Property expenses	4,062		3,955		107		11,990		11,561		429
Same Store NOI	$	10,600	$	12,629	$	(2,029	)	$	27,425	$	29,569	$	(2,144	)	Same Store NOI	$	12,255	$	10,631	$	1,624	$	35,986	$	35,663	$	323
Non-Same Store NOI	643		2,836		(2,193		)	13,292		13,224		68			Non-Same Store NOI	2,598		612		1,986		6,270		5,054		1,216
Segment NOI	$	11,243	$	15,465	$	(4,222	)	$	40,717	$	42,793	$	(2,076	)	Segment NOI	$	14,853	$	11,243	$	3,610	$	42,256	$	40,717	$	1,539

Retail same store NOI for the three months ended September 30, 2021 increased 15.3% compared to the three months ended September 30, 2020, which was primarily a result of higher rental revenue received from Regal Cinemas at Columbus Village II and Harrisonburg Regal as well as bad debt recoveries received at various properties. Retail same store NOI for the nine months ended September 30, ~~2020 decreased 16.1% and 7.3%, respectively, compared to~~2021 was materially consistent with the corresponding periods in 2019. The decreases were primarily the result of our decision to terminate the leases for Regal Cinemas in Columbus Village II (part of the Town Center of Virginia Beach) and Harrisonburg. In addition to the amounts recorded for Regal Cinemas, the Company recognized a $0.4 million and $1.2 million increase in the allowance for bad debt (recorded as an adjustment to rental revenues) as a result of the COVID-19 pandemic for the three and nine months ended September 30, ~~2020, respectively, compared to the corresponding periods in 2019.~~2020.

Multifamily Segment Data

Multifamily rental revenues, property expenses, and NOI for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows (in thousands):

Multifamily segment NOI for the three and nine months ended September 30, ~~2020~~2021 increased ~~0.9%~~48.6% and ~~16.5%~~41.8%, respectively, compared to the corresponding periods in ~~2019.~~2020. The increases ~~were~~relate primarily a result of higher occupancy at Greenside Apartments, which was in lease-up during 2019, higher occupancy at the Cosmopolitan, the commencement of operations at Summit Place in August 2020, and the commencement of operations at Hoffler Place in August 2019. In addition,to the acquisition of ~~1405 Point in April 2019 contributed to~~Edison Apartments and The Residences at Annapolis Junction, the ~~increase for the nine months ended September 30, 2020.~~delivery of Summit Place, and higher occupancy and rental rates at multiple properties.

Multifamily Same Store Results

Multifamily same store results for the three and nine months ended September 30, 2021 and 2020 ~~and 2019~~ exclude ~~Hoffler Place,~~The Residences at Annapolis Junction, Edison Apartments, Johns Hopkins Village, Summit Place, and The Cosmopolitan (due to redevelopment). In addition, multifamily same store results for the nine months ended September 30, 2020 and 2019 exclude Greenside Apartments, 1405 Point, and Premier Apartments.Cosmopolitan.

Multifamily same store rental revenues, property expenses and NOI for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows (in thousands):

Multifamily same store NOI for the three and nine ~~months~~ ended September 30, ~~2020 decreased 2.5%~~2021 increased 19.0% and ~~4.0%,~~10.9% respectively, compared to the corresponding periods in ~~2019.~~2020. The ~~decreases were~~increases relate primarily ~~the result~~to higher occupancy and rental rates at multiple properties.

Table of ~~decreased occupancy at Johns Hopkins Village and increased real estate taxes at Johns Hopkins Village and Greenside Apartments.~~Contents

General Contracting and Real Estate Services Segment Data

General contracting and real estate services revenues, expenses, and gross profit for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows (in thousands):


	Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended September 30,									Nine Months Ended September 30,
	2020			2019			Change			2020			2019			Change				2021			2020			Change			2021			2020			Change
Segment revenues	$	58,617		$	27,638		$	30,979		$	163,283		$	66,118		$	97,165		Segment revenues	$	17,502		$	58,617		$	(41,115)		$	71,473		$	163,283		$	(91,810)
Segment expenses	56,509			26,446			30,063			157,401			62,855			94,546			Segment expenses	15,944			56,509			(40,565)			68,350			157,401			(89,051)
Segment gross profit	$	2,108		$	1,192		$	916		$	5,882		$	3,263		$	2,619		Segment gross profit	$	1,558		$	2,108		$	(550)		$	3,123		$	5,882		$	(2,759)
Operating margin	3.6		%	4.3		%	(0.7		)%	3.6		%	4.9		%	(1.3		)%	Operating margin	8.9		%	3.6		%	5.3		%	4.4		%	3.6		%	0.8		%

General contracting and real estate services segment gross profit for the three and nine months ended September 30, ~~2020 increased 76.8%~~2021 decreased 26.1% and ~~80.3%~~46.9%, respectively, compared to the corresponding periods in ~~2019.~~2020. The ~~increases were primarily attributable~~decreases resulted from a lower volume of projects during the three and nine months ended September 30, 2021. By contrast, operating margin for the three months ended September 30, 2021 increased 5.3% compared to the ~~high backlog at December 31, 2019 resulting in increased activity during~~three months ended September 30, 2020 primarily due to recognition of project savings. Operating margin for the nine months ofended September 30, 2021 was materially consistent with the nine months ended September 30, 2020.

The changes in third party construction backlog for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows (in thousands):

As of September 30, ~~2020,~~2021, we had ~~$14.4~~$51.2 million in the backlog onfor the ~~Solis~~Adams Hill Apartments project, ~~$14.1~~$36.0 million ~~in backlog on~~for the Boulders Lakeview Apartments project, and $8.1 million for the Interlock ~~Commercial project and $28.1 million in backlog on the Holly Springs Apartments~~Rooftop project.

Table of Contents

Consolidated Results of Operations

The following table summarizes the results of operations for the three and nine months ended September 30, 2021 and 2020 ~~and 2019:~~(in thousands):


	Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			Change			2020			2019			Change				2021		2020		Change		2021		2020		Change
	(unaudited, in thousands)																			(unaudited)
Revenues																			Revenues
Rental revenues	$	39,636		$	42,220		$	(2,584	)	$	121,840		$	109,507		$	12,333		Rental revenues	$	49,560	$	39,636	$	9,924	$	142,679	$	121,840	$	20,839
General contracting and real estate services revenues	58,617			27,638			30,979			163,283			66,118			97,165			General contracting and real estate services revenues	17,502		58,617		(41,115)		71,473		163,283		(91,810)
Total revenues	98,253			69,858			28,395			285,123			175,625			109,498			Total revenues	67,062		98,253		(31,191)		214,152		285,123		(70,971)

Expenses																			Expenses
Rental expenses	10,223			9,873			350			27,907			24,513			3,394			Rental expenses	12,717		10,223		2,494		34,841		27,907		6,934
Real estate taxes	4,760			4,180			580			13,326			10,759			2,567			Real estate taxes	5,543		4,760		783		16,314		13,326		2,988
General contracting and real estate services expenses	56,509			26,446			30,063			157,401			62,855			94,546			General contracting and real estate services expenses	15,944		56,509		(40,565)		68,350		157,401		(89,051)
Depreciation and amortization	14,176			15,465			(1,289		)	42,232			38,874			3,358			Depreciation and amortization	16,886		14,176		2,710		52,237		42,232		10,005
Amortization of right-of-use assets - finance leases	147			145			2			440			230			210			Amortization of right-of-use assets - finance leases	278		147		131		745		440		305
General and administrative expenses	2,601			2,977			(376		)	9,382			9,329			53			General and administrative expenses	3,449		2,601		848		10,957		9,382		1,575
Acquisition, development and other pursuit costs	26			93			(67		)	555			550			5			Acquisition, development and other pursuit costs	8		26		(18)		111		555		(444)
Impairment charges	47			—			47			205			—			205			Impairment charges	—		47		(47)		3,122		205		2,917
Total expenses	88,489			59,179			29,310			251,448			147,110			104,338			Total expenses	54,825		88,489		(33,664)		186,677		251,448		(64,771)
Gain on real estate dispositions	3,612			4,699			(1,087		)	6,388			4,699			1,689
Gain (loss) on real estate dispositions, net																			Gain (loss) on real estate dispositions, net	(113)		3,612		(3,725)		3,604		6,388		(2,784)
Operating income	13,376			15,378			(2,002		)	40,063			33,214			6,849			Operating income	12,124		13,376		(1,252)		31,079		40,063		(8,984)
Interest income	4,417			5,710			(1,293		)	16,055			16,622			(567		)	Interest income	3,766		4,417		(651)		14,628		16,055		(1,427)
Interest expense on indebtedness	(7,294		)	(8,828		)	1,534			(22,252		)	(22,205		)	(47		)
Interest expense on finance leases	(229		)	(228		)	(1		)	(686		)	(340		)	(346		)
Equity in income of unconsolidated real estate entities	—			—			—			—			273			(273		)
Interest expense																			Interest expense	(8,827)		(7,523)		(1,304)		(25,220)		(22,938)		(2,282)

Change in fair value of derivatives and other	318			(530		)	848			(1,424		)	(3,926		)	2,502			Change in fair value of derivatives and other	131		318		(187)		838		(1,424)		2,262
Unrealized credit loss release (provision)	33			—			33			(227		)	—			(227		)	Unrealized credit loss release (provision)	617		33		584		284		(227)		511
Other income (expense), net	177			362			(185		)	521			426			95			Other income (expense), net	(105)		177		(282)		81		521		(440)
Income before taxes	10,798			11,864			(1,066		)	32,050			24,064			7,986			Income before taxes	7,706		10,798		(3,092)		21,690		32,050		(10,360)
Income tax benefit	28			199			(171		)	220			339			(119		)	Income tax benefit	42		28		14		522		220		302
Net income	10,826			12,063			(1,237		)	32,270			24,403			7,867			Net income	7,748		10,826		(3,078)		22,212		32,270		(10,058)
Net loss attributable to noncontrolling interests in investment entities	45			(960		)	1,005			181			(640		)	821			Net loss attributable to noncontrolling interests in investment entities	—		45		(45)		—		181		(181)
Preferred stock dividends	(2,220		)	(1,234		)	(986		)	(4,462		)	(1,388		)	(3,074		)	Preferred stock dividends	(2,887)		(2,220)		(667)		(8,661)		(4,462)		(4,199)
Net income attributable to common stockholders and OP Unit holders	$	8,651		$	9,869		$	(1,218	)	$	27,989		$	22,375		$	5,614
Net income attributable to common stockholders and OP Unitholders																			Net income attributable to common stockholders and OP Unitholders	$	4,861	$	8,651	$	(3,790)	$	13,551	$	27,989	$	(14,438)

Rental revenues for the three ~~months ended September 30, 2020 decreased $2.6 million compared to the three months ended September 30, 2019. Rental revenues for the~~and nine months ended September 30, ~~2020~~2021 increased ~~$12.3 million~~25.0% and 17.1%, respectively, compared to the ~~nine months ended September 30, 2019~~corresponding periods in 2020 as follows (in thousands):

Office rental revenues for the three and nine months ended September 30, ~~2020~~2021 increased ~~11.4%~~4.2% and ~~38.4%~~9.9%, respectively, compared to the corresponding periods in ~~2019. The increase for~~2020 primarily as a result of the ~~three months ended September 30, 2020 relates primarily to the commencement of operations at a portion of~~ Wills Wharf property that was placed into service beginning in June 2020. In addition, 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 contributed to the increase for the nine months ended September 30, 2020.

Retail rental revenues for the three and nine months ended September 30, ~~2020 decreased 24.6%~~2021 increased 29.1% and ~~4.3%,~~5.3% respectively, compared to the corresponding periods in ~~2019~~2020, primarily as a result of the acquisitions of Nexton Square, Delray Beach Plaza, Overlook Village, and Greenbrier Square along with the completion of the redevelopment at Apex Entertainment. Additionally, rental revenue has increased for Columbus Village II and Harrisonburg Regal due to higher rental revenue received from Regal Cinemas. These increases were partially offset by the disposition of the seven-property retail portfolio in May 2020 and our decision to terminate the leases for Regal Cinemas in Columbus Village II (part of the Town Center of Virginia Beach) and Harrisonburg. The Company has written off the accounts receivable for this tenant as an adjustment to rental revenue totaling $1.1 million. The Company is evaluating potential uses for the existing buildings as well as ~~potential redevelopment concepts at each location~~the dispositions of Oakland Marketplace and will assess the recoverability of its investment in each of the buildings as part of this evaluation. In addition to the amounts recorded for Regal Cinemas, the Company recognized a $0.4 million and $1.3 million increase in the allowance for bad debt recorded as an adjustment to rental revenues) as a result of the COVID-19 pandemic for the three and nine months ended September 30, 2020, respectively, compared to the corresponding periods in 2019. The decrease in the nine months ended September 30, 2020 was partially offset by 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.Socastee Commons.

Multifamily rental revenues for the three and nine months ended September 30, ~~2020~~2021 increased ~~12.1%~~39.1% and ~~20.3%~~42.3%, respectively, compared to the corresponding periods in ~~2019,~~2020 primarily as a result of higher occupancy at Greenside Apartments, which was in lease-up during 2019, higher occupancy at the Cosmopolitan, the commencement of operations at Summit Place in August 2020, and the commencement of operations at Hoffler Place in August 2019. In addition, the acquisition of ~~1405 Point in April 2019 contributed to~~Edison Apartments and The Residences at Annapolis Junction, the ~~increase for the nine months ended September 30, 2020.~~delivery of Summit Place, and higher occupancy and rental rates at multiple properties.

General contracting and real estate services revenues for the three and nine months ended September 30, ~~2020 increased 112.1%~~2021 decreased 70.1% and ~~147.0%~~56.2%, respectively, compared to the corresponding periods in ~~2019, due to due to the high~~2020 as there were no new significant third-party projects commencing in late 2020 or early 2021. The backlog atas of December 31, ~~2019 resulting in increased activity~~2020 was substantially completed and $107.0 million worth of contracts were added during the nine months ~~of 2020.~~ended September 30, 2021.

Rental expenses for the three and nine months ended September 30, ~~2020~~2021 increased ~~$0.4 million~~24.4% and ~~$3.4 million,~~24.8%, respectively, compared to the corresponding periods in ~~2019,~~2020 as follows (in thousands):

Office rental expenses for the three and nine months ended September 30, ~~2020~~2021 increased ~~10.5%~~12.1% and ~~29.3%~~17.0%, respectively, compared to the corresponding periods in ~~2019. The increase for the three months ended September 30,~~ 2020 ~~relates~~ primarily due to the ~~commencement of operations at a portion of~~ Wills Wharf property that was placed into service beginning in June ~~2020. In addition, the acquisition of One City Center~~2020 as well as higher utility costs due to tenants returning to working in March 2019, the commencement of operations at Brooks Crossing Office in April 2019, and the acquisition of Thames Street Wharf in June 2019 contributed to the increase for the nine months ended September 30, 2020.their offices.

Retail rental expenses for the three and nine months ended September 30, ~~2020 decreased 15.4%~~2021 increased 24.9% and ~~5.4%~~12.6%, respectively, compared to the corresponding periods in ~~2019,~~2020 primarily ~~as a result~~due to the acquisitions of Nexton Square, Delray Beach Plaza, Overlook Village, and Greenbrier Square along with the completion of the ~~disposal of Lightfoot Marketplace in August 2019, the loss of Dick’s Sporting goods~~redevelopment at ~~Town Center beginning February 2020, and~~Apex Entertainment. These increases were partially offset by the disposition of the seven-property retail portfolio in May 2020 as well as ~~decreases in non-essential repairs~~the dispositions of Oakland Marketplace and maintenance and contracted services expenses in response to the COVID-19 pandemic. The decrease for the nine months ended September 30, 2020 was partially offset by 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.Socastee Commons.

Multifamily rental expenses for the three and nine months ended September 30, ~~2020~~2021 increased ~~13.4%~~32.3% and ~~21.0%~~38.3%, respectively, compared to the corresponding periods in ~~2019,~~2020 primarily as a result of higher occupancy at Greenside Apartments, which was in lease-up during 2019, higher occupancy at the Cosmopolitan, the commencement of operations at Summit Place in August 2020, and the commencement of operations at Hoffler Place in August 2019. In addition,due the acquisition of ~~1405 Point in April 2019 contributed to~~Edison Apartments and The Residences at Annapolis Junction as well as the ~~increase for the nine months ended September 30, 2020.~~delivery of Summit Place.

Real estate taxes for the three and nine months ended September 30, ~~2020~~2021 increased ~~$0.6 million~~16.4% and ~~increased $2.6 million,~~22.4%, respectively, compared to the corresponding periods in ~~2019,~~2020, as follows (in thousands):

Office real estate taxes for the three and nine months ended September 30, ~~2020~~2021 increased ~~20.5%~~12.5% and ~~61.6%~~15.2%, respectively, compared to the corresponding periods in ~~2019. The increase for the three months ended September 30,~~ 2020 ~~relates~~ primarily due to ~~the commencement of operations at a portion of~~ Wills Wharf ~~in June 2020. In addition, the acquisition of One City Center in March 2019, the commencement of operations~~being placed into service as well as an increased assessment at ~~Brooks Crossing Office in April 2019, and the acquisition of~~ Thames Street ~~Wharf in June 2019 contributed to the increase for the nine months ended September 30, 2020.~~Wharf.

Retail real estate taxes for the three and nine months ended September 30, ~~2020 decreased 18.5%~~2021 increased 16.2% and 5.5%, respectively, compared to the ~~three months ended September 30, 2019,~~corresponding periods in 2020 primarily as a result of the ~~disposition~~acquisitions of the seven-property retail portfolio in May 2020. Retail real estate taxes for the nine months ended September 30, 2020 increased 1.0% compared to the nine months ended September 30, 2019, primarily as a result of the commencement of operations at Market at Mill Creek in April 2019Nexton Square, Delray Beach Plaza, Overlook Village, and ~~the acquisition of Red Mill Commons and Marketplace at Hilltop in May 2019.~~Greenbrier Square. These increases were ~~mostly~~partially offset by the disposition of the seven-property retail portfolio in May ~~2020.~~2020 as well as the dispositions of Oakland Marketplace and Socastee Commons.

Multifamily real estate taxes for the three and nine months ended September 30, ~~2020~~2021 increased ~~92.3%~~20.2% and ~~42.9%~~58.2%, respectively, compared to the corresponding periods in ~~2019,~~2020 primarily ~~as a result~~due to the acquisition of ~~increased assessments for Greenside~~Edison Apartments and ~~Hoffler Place. At Johns Hopkins Village, under~~The Residences at Annapolis Junction, the ~~terms~~delivery of ~~our agreement with Johns Hopkins University, beginning July 1, 2020, the Company is no longer being allocated a portion of the~~Summit Place, and expiring real estate tax ~~abatements related to the property.~~credits at Johns Hopkins Village.

General contracting and real estate services expenses for the three and nine months ended September 30, ~~2020 increased 113.7%~~2021 decreased 71.8% and ~~150.4%~~56.6%, respectively, compared to the corresponding periods in ~~2019,~~2020 due to fewer new significant third-party projects commencing in late 2020 or the ~~timing of commencement of new projects and the completion of other projects.~~nine months ended September 30, 2021.

Depreciation and amortization for the three ~~months ended September 30, 2020 decreased 8.3% compared to the three months ended September 30, 2019, primarily as result of the disposal of the seven-property retail portfolio in May 2020~~ and ~~acquired lease intangibles for other properties that were fully amortized in 2019. Depreciation and amortization for the~~ nine months ended September 30, ~~2020~~2021 increased ~~8.6%~~19.1% and 23.7%, respectively, compared to the ~~nine months ended September 30, 2019, as a result of~~corresponding periods in 2020. The increases were attributable to property acquisitions and development ~~properties placed~~deliveries. The increases were partially offset by dispositions in ~~service.~~2020 and 2021 and certain assets that became fully depreciated.

Amortization of right-of-use assets - finance leases for the three and nine months ended September 30, ~~2020~~2021 increased ~~1.4%~~89.1% and ~~91.3%~~69.3%, respectively, compared to the corresponding periods in ~~2019,~~2020 primarily due to the ~~expense being recognized for the full period in 2020. There were no right-of-use-assets recorded by the Company prior to the second quarter~~acquisition of ~~2019.~~Delray Beach Plaza shopping center, which has a ground lease classified as a finance lease.

General and administrative expenses for the three ~~months ended September 30, 2020 decreased 12.6% compared to the three months ended September 30, 2019, primarily due to the absence of accrued executive officer bonuses. General~~ and ~~administrative expenses for the~~ nine months ended September 30, ~~2020~~2021 increased ~~only 0.6%~~32.6% and 16.8%, respectively, compared to the ~~nine months ended September 30, 2019.~~corresponding periods in 2020. The increases resulted from increased insurance expense and higher compensation.

Acquisition, development and other pursuit costs for the three and nine months ended September 30, 2021 decreased 69.2% and 80.0%, respectively, compared to the corresponding periods in 2020 as a result of higher write off of costs for the three and nine months ended September 30, 2020 relating to certain development projects and acquisitions that were abandoned.

Impairment charges for the three months ended September 30, 2021 decreased ~~72.0%~~immaterially compared to the three months ended September 30, ~~2019. The costs incurred~~2020 primarily due to a lower number of the tenants in the ~~three months ended September 30, 2019 were primarily related~~current period that vacated prior to a potential development project that was abandoned. Acquisition, development and other pursuit costs for the three months ended September 30, 2020 were not significant. Acquisition, development and other pursuit costs for the nine months ended September 30, 2020 increased only 0.9%, compared to the nine months ended September 30, 2019, and these costs were due to the write off of costs relating to certain potential development projects and operating properties that were abandoned during each period.

their lease expiration. Impairment charges for the nine months ended September 30, 2021 increased $2.9 million compared to the nine months ended September 30, 2020, ~~relate~~due primarily to ~~tenants that vacated prior~~the impairment of Socastee Commons.

Loss on real estate dispositions for the three months ended September 30, 2021 relates to ~~their lease expiration.~~

the disposition of Socastee Commons. Gain on real estate dispositions during the nine months ended September 30, 2021 relates to the sale of the 7-Eleven at Hanbury, Oakland Marketplace, and easement rights at a non-operating land parcel. The gain was partially offset by the loss recognized upon the disposition of Socastee Commons. Gain on real estate dispositions for the three and nine months ended September 30, 2020 relates to the sale of a portfolio of seven retail properties in May 2020 and the sale of Walgreen's at Hanbury Village in August 2020. ~~Gain on real estate dispositions during the three and nine months ended September 30, 2019 relates to the sale of Lightfoot Marketplace and a non-operating land parcel.~~

Interest income for the three and nine months ended September 30, ~~2020~~2021 decreased ~~22.6%~~14.7% and ~~3.4%~~8.9%, respectively, compared to the corresponding periods in ~~2019,~~2020, primarily as a result of the lower notes receivable balance in the current period due to the ~~two~~repayment of some of our mezzanine loans ~~receivable placed on nonaccrual status effective April 1,~~at the end of 2020 ~~which was partially offset by higher balances from increased loan funding on~~and the ~~Interlock Commercial and Solis Apartment loans.~~beginning of 2021.

Interest expense on indebtedness for the three months ended September 30, 2020 decreased 17.4% compared to the three months ended September 30, 2019, primarily due to the paydown of the revolving credit facility balance during the current period and the overall decline in variable interest rates. Interest expense on indebtedness for the nine months ended September 30, 2020 increased 0.2% compared to the corresponding period in 2019, primarily due to increased borrowings on property loans.

~~Interest expense on finance leases~~ for the three and nine months ended September 30, ~~2020~~2021 increased ~~0.4%~~17.3% and ~~101.8%~~9.9%, respectively, compared to the corresponding periods in ~~2019,~~2020, primarily due to ~~expense being recognized for~~ the ~~full period~~loans obtained and assumed in ~~2020. The Company did not have finance leases prior to the second quarter of 2019.~~connection with acquisitions.

Equity in income of unconsolidated real estate entities for the nine months ended September 30, 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 derivatives and other for the three and nine months ended September 30, ~~2019 experienced significant negative~~2021 include fair value ~~changes~~increases for our derivative instruments due to ~~significant decreases~~increases in forward LIBOR (the London Inter-Bank Offered Rate) ~~during this time. Fair value changes during~~.

Unrealized credit loss release (provision) for the three and nine months ended September 30, ~~2020 were less dramatic.~~

~~Unrealized credit loss~~2021 include a release ~~(provision) relates to increased expected loan losses due to changes in economic conditions and changes~~ in the ~~status~~allowance for the Interlock Commercial mezzanine loan, which was determined based on the ramping up of ~~development projects that secure our mezzanine loans. The adoption~~leasing and operations at this project. For the nine months ended September 30, 2021, this was partially offset by the reserve recorded for the Nexton Multifamily investment.

Other income (expense), net for the three months ended September 30, 2020 decreased 51.1% compared to the three months ended September 30, 2019, primarily due to the absence of certain transactions like those that occurred in the three months ended September 30, 2019. Other income (expense), net for theand nine months ended September 30, ~~2020 increased 22.3%,~~2021 decreased by $0.3 million and $0.4 million, respectively, compared to the corresponding ~~period~~periods in ~~2019,~~2020, primarily due to certain insurance ~~claims made~~reimbursements in ~~order to recover the costs to the Company for minor repairs made to some of our properties.~~2020 that did not recur in 2021.

The income tax provision and benefits that we recognized during the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were attributable to the taxable profits and losses of our development and construction businesses that we operate through our TRS.

Liquidity and Capital Resources

~~In response to the COVID-19 pandemic, we have implemented various measures to preserve~~We believe 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, ~~required capital~~and other expenditures associated with our properties, including tenant improvements, leasing commissions and leasing incentives, dividend payments to ~~holders of~~ our ~~common stock and Series A Preferred Stock,~~stockholders required to maintain our REIT qualification, debt service, capital expenditures, new real estate development projects, mezzanine loan funding requirements, and ~~funding commitments relating to certain development projects.~~strategic acquisitions. We expect to meet our short-term liquidity requirements through net cash provided by operations, reserves established from existing cash, borrowings under construction loans to fund new real estate development and ~~if market conditions permit,~~construction, borrowings available under our credit facility, and net proceeds from the sale of common stock ~~or preferred stock~~ through our ~~at-the-market continuous equity offering program,~~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, and capital improvements. ~~As discussed below, we have proactively deferred previously announced development activity at several of our projects 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. In~~securities, and the ~~future, subject to available borrowing capacity, we~~opportunistic disposition of non-core properties. We also may fund property development and acquisitions and capital improvements using our credit facility pending long-term financing.

As of September 30, ~~2020,~~2021, we had unrestricted cash and cash equivalents of ~~$73.6~~$28.0 million available for both current liquidity needs as well as development and redevelopment activities. We also had restricted cash in escrow of ~~$5.6~~$5.4 million, some of which is available for capital expenditures and certain operating expenses at our operating properties. As of September 30, ~~2020,~~2021, we had ~~$125.0~~$89 million of available borrowings under our revolving credit facility to meet our short-term liquidity requirements and ~~$52.8~~$71.9 million of available borrowings under our construction loans to fund development activities.

We may enter into standby letters of credit using the available capacity under the credit facility. Letters of credit generally are available for draw down in the event the Company does not perform under certain obligations. As of September 30, 2021, the Operating Partnership had total outstanding letters of credit of $15.0 million to guarantee the funding of its investment in the Harbor Point Parcel 3 joint venture (T. Rowe Price global headquarters).

We have no loans scheduled to mature during the remainder of ~~2020, and $163.0 million of loans scheduled to mature in~~ 2021. We currently are in the process of refinancing these loans. We anticipate being required to curtail the loans secured by Hoffler Place and Summit Place by as much as $24.0 million in aggregate upon refinancing. We believe that together with our cash on hand, revolving credit facility, and general ability to access the capital markets, we will have sufficient resources to finance our operations and fund our debt service requirements and capital expenditures over the next 12 months.

~~Responses to COVID-19~~

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 temporarily 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. Our Board of Directors did not suspend the payment of dividends on shares of our Series A Preferred Stock.

As a result of improvement in general economic conditions and our operating performance, our Board of Directors reinstated quarterly cash dividends on shares of our common stock and Class A common units with dividend of $0.11 per share and unit, for the third quarter of 2020, which was paid on October 8, 2020 to stockholders and OP unitholders of record on September 30, 2020.



		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	76

	Notes to Condensed Consolidated Financial Statements	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2725

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5046

Item 4.	Controls and Procedures	5046

Part II. Other Information		5148

Item 1.	Legal Proceedings	5148

Item 1A.	Risk Factors	5148

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5148

Item 3.	Defaults Upon Senior Securities	5148

Item 4.	Mine Safety Disclosures	5148

Item 5.	Other Information	5148

Item 6.	Exhibits	5249



Signatures		5350


Related Debt	Notional Amount			Index	Swap Fixed Rate		Debt effective rate		Effective Date	Expiration Date	Related Debt	Notional Amount			Index		Swap Fixed Rate		Debt effective rate		Effective Date	Expiration Date
Senior unsecured term loan	$	50,000		1-month LIBOR	2.78	%	4.33	%	5/1/2018	5/1/2023	Senior unsecured term loan	$	50,000		1-month LIBOR		2.78	%	4.23	%	5/1/2018	5/1/2023
John Hopkins Village	51,101		^(a)	1-month LIBOR	2.94	%	4.19	%	8/7/2018	8/7/2025	John Hopkins Village	50,123		(a)	1-month LIBOR		2.94	%	4.19	%	8/7/2018	8/7/2025
Senior unsecured term loan	10,500		^(a)	1-month LIBOR	3.02	%	4.57	%	10/12/2018	10/12/2023	Senior unsecured term loan	10,500		(a)	1-month LIBOR		3.02	%	4.47	%	10/12/2018	10/12/2023
249 Central Park Retail, South Retail, and Fountain Plaza Retail	33,993		^(a)	1-month LIBOR	2.25	%	3.85	%	4/1/2019	8/10/2023	249 Central Park Retail, South Retail, and Fountain Plaza Retail	33,501		(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	%	3.81	%	4/1/2019	10/26/2022	Senior unsecured term loan	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	%	2.05	%	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	0.50	%	2.05	%	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	%	2.10	%	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
Thames Street Wharf											Thames Street Wharf	71,000		(a)	1-month BSBY	(b)	1.05	%	2.35	%	9/30/2021	9/30/2026
Total	$	340,594									Total	$	340,124



	September 30, 2020			December 31, 2019
	(Unaudited)
ASSETS
Real estate investments:
Income producing property	$	1,531,910		$	1,460,723
Held for development	13,607			5,000
Construction in progress	60,810			140,601
	1,606,327			1,606,324
Accumulated depreciation	(241,859		)	(224,738		)
Net real estate investments	1,364,468			1,381,586
Real estate investments held for sale	0			1,460
Cash and cash equivalents	73,579			39,232
Restricted cash	5,645			4,347
Accounts receivable, net	26,465			23,470
Notes receivable, net	168,716			159,371
Construction receivables, including retentions, net	43,324			36,361
Construction contract costs and estimated earnings in excess of billings, net	215			249
Operating lease right-of-use assets	32,818			33,088
Finance lease right-of-use assets	23,691			24,130
Acquired lease intangible assets, net	57,958			68,702
Other assets	44,393			32,901
Total Assets	$	1,841,272		$	1,804,897
LIABILITIES AND EQUITY
Indebtedness, net	$	886,509		$	950,537
Accounts payable and accrued liabilities	20,667			17,803
Construction payables, including retentions	55,825			53,382
Billings in excess of construction contract costs and estimated earnings	7,085			5,306
Operating lease liabilities	41,589			41,474
Finance lease liabilities	17,941			17,903
Other liabilities	60,219			63,045
Total Liabilities	1,089,835			1,149,450

Stockholders’ equity:
Preferred stock, $0.01 par value, 100,000,000 shares authorized: 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, 9,980,000 and 2,930,000 shares authorized as of September 30, 2020 and December 31, 2019, respectively, 6,843,418 and 2,530,000 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	171,085			63,250
Common stock, $0.01 par value, 500,000,000 shares authorized; 57,934,042 and 56,277,971 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	579			563
Additional paid-in capital	464,632			455,680
Distributions in excess of earnings	(107,262		)	(106,676		)
Accumulated other comprehensive loss	(9,767		)	(4,240		)
Total stockholders’ equity	519,267			408,577
Noncontrolling interests in investment entities	537			4,462
Noncontrolling interests in Operating Partnership	231,633			242,408
Total Equity	751,437			655,447
Total Liabilities and Equity	$	1,841,272		$	1,804,897



Net proceeds from issuance of cumulative redeemable perpetual preferred stock	107,739		—		(6,370		)	—			—			101,369			—		—			101,369
Net proceeds from issuance of common stock	—		2		1,620			—			—			1,622			—		—			1,622
Restricted stock awards, net of tax withholding	—		0		524			—			—			524			—		—			524
Restricted stock award forfeitures	—		—		(4		)	—			—			(4		)	—		—			(4		)
Issuance of operating partnership units for acquisitions	—		—		—			—			—			—			—		67			67
Redemption of operating partnership units	—		7		8,523			—			—			8,530			—		(8,530		)	0
Dividends declared on preferred stock	—		—		—			(2,220		)	—			(2,220		)	—					(2,220		)
Dividends and distributions declared on common shares and units ($0.11 per share and unit)	—		—		—			(6,388		)	—			(6,388		)	—		(2,257		)	(8,645		)
Balance, September 30, 2020	$	171,085	$	579	$	464,632		$	(107,262	)	$	(9,767	)	$	519,267		$	537	$	231,633		$	751,437



Issuance of operating partnership units for acquisitions	—		—		—		—			—			—			—		2,054			2,054
Redemption of operating partnership units	—		1		1,439		—			—			1,440			—		(1,440		)	0
Dividends declared on preferred stock	—		—		—		(1,388		)	—			(1,388		)	—		—			(1,388		)
Dividends and distributions declared on common shares and units ($0.21 per share and unit)	—		—		—		(11,522		)	—			(11,522		)	—		(4,445		)	(15,967		)
Balance, September 30, 2019	$	63,250	$	549	$	430,193	$	(100,087	)	$	(5,308	)	$	388,597		$	5,510	$	242,478		$	636,585



	September 30, 2020		September 30, 2019
Cash and cash equivalents	$	73,579	$	44,195
Restricted cash ^(a)	5,645		3,411
Cash, cash equivalents, and restricted cash	$	79,224	$	47,606



	Nexton Square
Land	$	9,885
Site improvements	3,690
Building and improvements	24,070
In-place leases	5,239
Below-market leases	(1,877		)
Fair value adjustment on acquired debt	364
Net assets acquired	$	41,371



	Year of Origination
Risk Ratings	2020		2019		2018		2017		2016		Total
Pass	$	0	$	0	$	111,611	$	0	$	0	$	111,611
Special Mention	0		0		0		0		0		0
Substandard	0		0		0		14,723		42,368		57,091
Total amortized cost basis	$	0	$	0	$	111,611	$	14,723	$	42,368	$	168,702



	Nine Months Ended September 30, 2020
Beginning balance (December 31, 2019)	$	0
Cumulative effect of accounting change	2,825
Unrealized credit loss provision	227
Ending balance	$	3,052



	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 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
Beginning balance	$	249		$	5,306		$	1,358		$	3,037
Revenue recognized that was included in the balance at the beginning of the period	—			(5,306		)	—			(3,037		)
Increases due to new billings, excluding amounts recognized as revenue during the period	—			7,237			—			4,256
Transferred to receivables	(468		)	—			(2,015		)	—
Construction contract costs and estimated earnings not billed during the period	215			—			624			—
Changes due to cumulative catch-up adjustment arising from changes in the estimate of the stage of completion	219			(152		)	657			(923		)
Ending balance	$	215		$	7,085		$	624		$	3,333



	September 30, 2020			December 31, 2019
Costs incurred on uncompleted construction contracts	$	852,966		$	695,564
Estimated earnings	30,354			24,553
Billings	(890,190		)	(725,174		)
Net position	$	(6,870	)	$	(5,057	)

Construction contract costs and estimated earnings in excess of billings	$	215		$	249
Billings in excess of construction contract costs and estimated earnings	(7,085		)	(5,306		)
Net position	$	(6,870	)	$	(5,057	)



Development project	Payment guarantee amount
The Residences at Annapolis Junction	$	8,300
Delray Plaza	5,180
Interlock Commercial	34,300
Total	$	47,780



FORM			10-Q



Tenant	Property	Effective Date	SF Impact	ABR Impact		ABR per Leased SF
Bed, Bath, & Beyond	North Point Center	1/31/2021	30,000	$	300,000	$	10.00
Bed, Bath, & Beyond	Wendover Village	1/31/2021	33,696	404,352		12.00
Regal Cinemas ^(a)	Columbus Village II	10/20/2020	51,545	995,334		19.31
Regal Cinemas ^(a)	Harrisonburg Regal	10/25/2020	49,000	717,850		14.65
Bi-Lo ^(a)	Socastee Commons	1/31/2021	46,673	492,400		10.55
Total/Weighted Average			210,914	$	2,909,936	$	13.80


	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												Secured Debt
Hoffler Place ^(b)	$	31,197		LIBOR + 3.24%		3.39	%		January 1, 2021	$	31,197
Summit Place ^(b)	34,615			LIBOR + 3.24%		3.39	%		January 1, 2021	34,615
Southgate Square	19,902			LIBOR + 1.60%		1.75	%		April 29, 2021	19,462
Nexton Square	22,909			LIBOR + 2.25%		2.40	%		August 8, 2021	22,909
Encore Apartments ^(c)	24,464			3.25	%				September 10, 2021	23,992
4525 Main Street ^(c)	31,395			3.25	%				September 10, 2021	30,788
Red Mill West	10,964			4.23	%				June 1, 2022	10,187		Red Mill West	$	10,504			4.23%				June 1, 2022	$	10,187
Thames Street Wharf	70,000			LIBOR + 1.30%		1.81	%	^(d)	June 26, 2022	70,000
Marketplace at Hilltop	10,221			4.42	%				October 1, 2022	9,383		Marketplace at Hilltop	9,811				4.42%				October 1, 2022	9,383
1405 Point	53,000			LIBOR + 2.25%		2.40	%		January 1, 2023	51,532		1405 Point	52,468		LIBOR+		2.25%	2.33	%		January 1, 2023	51,532
Socastee Commons	4,486			4.57	%				January 6, 2023	4,223
Sandbridge Commons ^(e)	7,835			LIBOR + 1.75%		1.90	%		January 17, 2023	7,247
Nexton Square												Nexton Square	20,107		LIBOR+		2.25%	2.50	%		February 1, 2023	20,107
Wills Wharf	57,585			LIBOR + 2.25%		2.40	%		June 26, 2023	57,585		Wills Wharf	62,601		LIBOR+		2.25%	2.33	%		June 26, 2023	62,601
249 Central Park ^(f)	16,656			LIBOR + 1.60%		3.85	%	^(d)	August 10, 2023	15,935
Fountain Plaza Retail ^(f)	10,024			LIBOR + 1.60%		3.85	%	^(d)	August 10, 2023	9,590
South Retail ^(f)	7,313			LIBOR + 1.60%		3.85	%	^(d)	August 10, 2023	6,996
249 Central Park Retail(b)												249 Central Park Retail(b)	16,416		LIBOR+		1.60%	3.85	%	(d)	August 10, 2023	15,935
Fountain Plaza Retail(b)												Fountain Plaza Retail(b)	9,878		LIBOR+		1.60%	3.85	%	(d)	August 10, 2023	9,589
South Retail(b)												South Retail(b)	7,207		LIBOR+		1.60%	3.85	%	(d)	August 10, 2023	6,996
Hoffler Place(c)												Hoffler Place(c)	18,400		LIBOR+		2.60%	3.00	%		January 1, 2024	18,143
Summit Place(c)												Summit Place(c)	23,100		LIBOR+		2.60%	3.00	%		January 1, 2024	22,789
One City Center	24,864			LIBOR + 1.85%		2.00	%		April 1, 2024	22,559		One City Center	24,244		LIBOR+		1.85%	1.93	%		April 1, 2024	22,559
Southgate Square												Southgate Square	19,207		LIBOR+		2.25%	3.00	%		April 29, 2024	17,358
Chronicle Mill												Chronicle Mill	—		LIBOR+		3.00%	3.25	%		May 5, 2024	—
Red Mill Central	2,406			4.80	%				June 17, 2024	1,765		Red Mill Central	2,232				4.80%				June 17, 2024	1,765
Solis Gainesville	—			LIBOR + 3.00%		3.75	%		August 31, 2024	—
Premier Apartments ^(g)	16,750			LIBOR + 1.55%		1.70	%		October 31, 2024	15,848
Premier Retail ^(g)	8,250			LIBOR + 1.55%		1.70	%		October 31, 2024	7,806
Gainesville Apartments												Gainesville Apartments	9,773		LIBOR+		3.00%	3.75	%		August 31, 2024	9,773
Premier Apartments(e)												Premier Apartments(e)	16,562		LIBOR+		1.55%	1.63	%		October 31, 2024	15,848
Premier Retail(e)												Premier Retail(e)	8,157		LIBOR+		1.55%	1.63	%		October 31, 2024	7,806
Red Mill South	5,910			3.57	%				May 1, 2025	4,383		Red Mill South	5,598				3.57%				May 1, 2025	4,383
Brooks Crossing Office	15,517			LIBOR + 1.60%		1.75	%		July 1, 2025	11,451		Brooks Crossing Office	15,010		LIBOR+		1.60%	1.68	%		July 1, 2025	13,034
Market at Mill Creek	13,951			LIBOR + 1.55%		1.70	%		July 12, 2025	10,876		Market at Mill Creek	13,303		LIBOR+		1.55%	1.63	%		July 12, 2025	10,876
Johns Hopkins Village	51,101			LIBOR + 1.25%		4.19	%	^(d)	August 7, 2025	45,967
North Point Center-Phase II	2,128			7.25	%				September 15, 2025	1,344
Johns Hopkins Village(f)												Johns Hopkins Village(f)	50,123		LIBOR+		1.25%	4.19	%	(d)	August 7, 2025	45,967
North Point Center Note 2												North Point Center Note 2	1,978				7.25%				September 15, 2025	1,328
Encore Apartments(g)												Encore Apartments(g)	24,656				2.93%				February 10, 2026	22,214
4525 Main Street(g)												4525 Main Street(g)	31,645				2.93%				February 10, 2026	28,512
Delray Beach Plaza												Delray Beach Plaza	14,184		LIBOR+		3.00%	3.08	%		March 8, 2026	11,627
Thames Street Wharf												Thames Street Wharf	71,000		BSBY+		1.30%	2.35	%	(d)	September 30, 2026	60,719
Greenbrier Square												Greenbrier Square	20,000				3.74%				October 10, 2027	18,049
Lexington Square	14,505			4.50	%				September 1, 2028	12,044		Lexington Square	14,240				4.50%				September 1, 2028	12,044
Red Mill North	4,319			4.73	%				December 31, 2028	3,295		Red Mill North	4,216				4.73%				December 31, 2028	3,295
Greenside Apartments	33,486			3.17	%				December 15, 2029	26,090		Greenside Apartments	32,778				3.17%				December 15, 2029	26,095
The Residences at Annapolis Junction												The Residences at Annapolis Junction	84,374		SOFR+		2.66%	2.71	%		November 1, 2030	71,183
Smith's Landing	17,546			4.05	%				June 1, 2035	384		Smith's Landing	16,676				4.05%				June 1, 2035	384
Liberty Apartments	13,950			5.66	%				November 1, 2043	—		Liberty Apartments	13,650				5.66%				November 1, 2043	90
Edison Apartments												Edison Apartments	16,015				5.30%				December 1, 2044	100
The Cosmopolitan	43,110			3.35	%				July 1, 2051	—		The Cosmopolitan	42,297				3.35%				July 1, 2051	187
Total secured debt	$	680,359								$	569,453	Total secured debt	$	782,410								$	632,458
Unsecured Debt
Unsecured debt												Unsecured debt
Senior unsecured revolving credit facility	$	—		LIBOR+1.30%-1.85%		1.75	%		January 24, 2024	$	—	Senior unsecured revolving credit facility	$	30,000	LIBOR+	1.30%-1.85%		1.58	%		January 24, 2024	$	30,000
Senior unsecured term loan	19,500			LIBOR+1.25%-1.80%		1.70	%		January 24, 2025	19,500		Senior unsecured term loan	19,500		LIBOR+	1.25%-1.80%		1.53	%		January 24, 2025	19,500
Senior unsecured term loan	185,500			LIBOR+1.25%-1.80%		2.05%-4.57%		^(d)	January 24, 2025	185,500		Senior unsecured term loan	185,500		LIBOR+	1.25%-1.80%		1.95%-4.47%		(d)	January 24, 2025	185,500
Total unsecured debt	$	205,000								$	205,000	Total unsecured debt	235,000									235,000
Total principal balances	885,359									774,453		Total principal balances	1,017,410									$	867,458
Other notes payable(h)												Other notes payable(h)	10,109
Unamortized GAAP adjustments	(8,820		)							—		Unamortized GAAP adjustments	(8,971)
Other notes payable ^(h)	9,970									—
Loan reclassified to liabilities related to assets held for sale												Loan reclassified to liabilities related to assets held for sale	(50,123)
Indebtedness, net	$	886,509								$	774,453	Indebtedness, net	$	968,424


Year⁽¹⁾	Year⁽¹⁾	Amount Due		Percentage of Total		Year(1)	Amount Due		Percentage of Total
2020 (excluding nine months ended September 30, 2020)		$	2,660	1	%
2021		173,557		20	%
2021 (excluding nine months ended September 30, 2021)						2021 (excluding nine months ended September 30, 2021)	3,334		*
2022	2022	99,141		11	%	2022	32,822		3	%
2023	2023	161,070		18	%	2023	179,889		18	%
2024	2024	55,166		6	%	2024	159,480		16	%
2025						2025	293,330		29	%
Thereafter	Thereafter	393,765		44	%	Thereafter	348,555		34	%
Total	Total	$	885,359	100	%	Total	$	1,017,410	100	%



(1) The adjustment for depreciation and amortization for the three and nine months ended September 30, 2020 ~~and 2019~~ excludes $0.1 million and $0.4 million, respectively, of depreciation attributable to the Company's joint venture partners. The adjustment for depreciation and amortization for the nine months ended September 30, 2020 and 2019 excludes $0.4 million and $0.8 million, respectively, of depreciation attributable to the Company's joint venture partners. The adjustment for depreciation and amortization for the nine months ended September 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.
(2) The adjustment for gain on operating real estate dispositions for the ~~three and~~ nine months ended September 30, ~~2019 excludes the portion of the gain on Lightfoot Marketplace that was allocated to our joint venture partner and~~2021 excludes the gain on sale of easement rights on a non-operating ~~land~~ parcel.



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,~~2020, filed on February 23, ~~2018)~~2021).

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).

3.4		Articles Supplementary relating to Section 3-802(c) of the Maryland General Corporation Law (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on February 24, 2020).

3.5		Articles Supplementary Designating Additional 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, dated March 6, 2020 (Incorporated by reference to Exhibit 4.10 to the Company’s Form S-3, filed on March 9, 2020).

3.6		Articles Supplementary Designating Additional 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, dated July 2, 2020 (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on July 6, 2020).

3.7		Articles Supplementary Designating Additional 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock, dated August 17, 2020 (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on August 20, 2020).

10.131.1		~~Amendment No. 4 to the First Amended and Restated Agreement of Limited Partnership of the Operating Partnership.~~

10.2*	~~Amendment No. 5 to the First Amended and Restated Agreement of Limited Partnership of the Operating Partnership.~~

10.3*	~~Amendment No. 6 to the First Amended and Restated Agreement of Limited Partnership of the Operating Partnership.~~

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 September 30, ~~2020,~~2021, 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 Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL.

*		~~Filed herewith~~







*		Filed herewith

**		Furnished herewith




			ARMADA HOFFLER PROPERTIES, INC.

Date: November ~~5, 2020~~4, 2021			/s/ Louis S. Haddad
			Louis S. Haddad
			President and Chief Executive Officer
			(Principal Executive Officer)

Date: November ~~5, 2020~~4, 2021			/s/ Michael P. O’Hara
			Michael P. O’Hara
			Chief Financial Officer, Treasurer and Secretary
			(Principal Accounting and Financial Officer)