Good morning, ladies and gentlemen, and welcome to the Armada Hoffler 3rd Quarter 2024 earnings call conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, November 5th, 2024. I would now like to turn the call over to Chelsea Forrest, Vice President of Investor Relations. Please go ahead. Good morning, and thank you for joining Armada Hoffler's 3rd Quarter 2024 earnings conference call and webcast. On the call this morning, in addition to myself, is Lou Haddad, Chairman and CEO, Shawn Tibbetts, President and COO, and Matthew Barnes-Smith, CFO. The press release announcing our third quarter earnings, along with our supplemental package, were distributed yesterday afternoon. A replay of this call will be available shortly after the conclusion of the call through December 30th, 2024. The numbers to access the replay are provided in the earnings press release. For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, November 5th, 2024, and will not be updated subsequent to this initial earnings call. During this call, we made forward-looking statements, including statements related to the future performance of our portfolio, our development pipeline, the impact of acquisitions and dispositions, our mezzanine program, our construction business, our liquidity position, our portfolio performance, and financing activities, as well as comments on our guidance and outlook. Listeners are cautioned that any forward-looking statements are based upon management's beliefs, assumptions, and expectations, taking into account information that is currently available. These beliefs, assumptions, and expectations may change as a result of possible events or factors, not all of which are known and many of which are difficult to predict and generally beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations, and we advise listeners to review the forward-looking statement disclosure in our press release that we distributed yesterday and the risk factors disclosed in the documents we have filed with or furnished to the SEC. We will also discuss certain non-GAAP financial measures, including but not limited to FFO and normalized FFO. Definitions of these non-GAAP measures, as well as reconciliations to the most comparable GAAP measures, are included in the quarterly supplemental package, which is available on our website at armadahoffler.com. I'll now turn the call over to Lou. Good morning, everyone. Thank you for joining us today. I want to take a moment to update you on the progress of our succession plan that was announced nearly a year ago. The transition to Shawn as the incoming CEO is on schedule and nearly complete. Early next year, I will officially pass the torch, and I look forward to supporting Shawn, Matt, and the rest of the team as Executive Chairman. This will be my final earnings call as CEO, and I couldn't be more excited for the future of Armada Hoffler. This transition is more than a new leader at the helm. The company has been moving towards a stronger balance sheet, higher emphasis on property NOI growth, and less reliance on fee income than at any time since our IPO. I want to thank our shareholders and, most importantly, the Armada Hoffler team for their continuous dedication to our company. I look forward to sharing our results today and discussing the bright path ahead. I will now turn the call over to Shawn. Thank you, Lou, for the encouraging comments on the transition progress, as well as the confidence you and the board have placed in me and the Armada Hoffler team. I look forward to this next chapter in leading Armada Hoffler to achieve our strategic long-term objectives. Our team will continue to build upon the foundation you have established while growing responsibly, maintaining agility to meet the market's demands, and leveraging core company values to enhance shareholder returns for years to come. Your leadership, coupled with Dan's guidance, has served as a bellwether for the company's success, and we appreciate your investment in the company. Thank you to everyone joining us today to discuss the impressive results our team achieved during the third quarter, our asset performance, and business unit results. We will also provide some thoughts on the remainder of the year and beyond. I would like to start by touching on our plan for growth for the next few years. The first step in our plan was to strengthen the company's balance sheet and simultaneously prepare for growth in our property income, specifically in the multifamily segment. In September, we successfully executed a $108 million common equity offering that reduced leverage and positioned us to add approximately 900 multifamily units across four high-quality assets, resulting in a 37% increase in door count. The goal going forward is to continuously improve portfolio quality while bringing online several important development assets, which we believe will significantly add to our NOI, while also incrementally improving the balance sheet. In addition to delivering these key development projects, we will also look to opportunistically add multifamily and select retail assets located in secondary high-growth southeastern markets. The second step in our plan is an upgraded debt profile focused on lower leverage and an improved cost of capital. Real estate is all about spread investing and appropriate leverage. In the more stabilized rate environment that we expect going forward, we will strive to enhance the quality of our debt with an eye towards longer-term fixed-rate instruments. As you can see from the release, we had another strong performance for Quarter 3, 2024, at $0.35 normalized FFO per diluted share. Our best-in-class portfolio features minimal lease maturities for the next few years. We are currently experiencing minor development delays at Harbor Point in Baltimore, and as a result, we now expect both projects to be delivered in early 2025. The most notable impact relates to Allied, which we now expect will deliver in early 2025. As a result, and as Matt will mention, interest expense through the end of this year is anticipated to be lower than planned due to continued capitalization, resulting in higher-than-expected bottom-line earnings for the fourth quarter. With initial delivery anticipated for early 2025, the 18-24-month lease-up period to stabilization is expected to begin during the most challenging time of the year for apartment leasing, creating additional headwinds for earnings growth in 2025. As we have mentioned, we intend to lease the asset at a controlled and balanced pace in order to maintain a market-rate floor for the sub-market and thereby avoid eroding our current position in that market. This, coupled with the one-time events mentioned on the last call, is why we are reiterating our expectation to conclude this year at the high end, narrowing our range to the high end of guidance. Let me remind you that we are in the midst of seeking to deliver several large-scale trophy assets that sit at the high end of their respective sub-markets. Although development execution is inherently complicated, the degree of value creation is nothing short of impressive. At stabilization, we will have completed two major additions to the Mid-Atlantic region's highest-quality development location, changing the skyline of a city with the finest properties in each class. We are focused on optimizing portfolio performance and pursuing disciplined capital allocation opportunities. While there are always challenges in delivering large developments or competing with new supply in multifamily, the operating environment across our sectors remains strong. We reported robust occupancy of 95%. As I said last quarter, consistently high occupancy and NOI on target are a result of strong leasing and our team's laser focus on optimizing the portfolio performance. Those efforts are bolstered by properties that are the newest and best assets, which are strategically positioned in attractive growth markets. Whether in a mixed-use setting or otherwise, our properties and communities offer top-tier amenities that attract investment-grade tenants who select them over the competition. Speaking of mixed-use, on October 24th, I was honored to cut the ribbon at Southern Post alongside the CEO of Vestas, our anchor tenant, and leadership from the City of Roswell. Over 500 people joined us to tour and experience the asset, engage with the commercial tenants, and celebrate our newest trophy mixed-use asset in Roswell, Georgia. My remarks at the event emphasized that Southern Post truly embodies the live, work, play culture that defines the high-end Roswell market. The project is receiving an overwhelmingly positive response from the business community, and I couldn't be more proud to represent the company as we achieved this exciting milestone. Southern Post once again proves our thesis for a mixed-use strategy. High-quality ecosystem situated in a market with some of the best demographic and growth fundamentals throughout the Southeast results in a consistently high performance. Let's quickly walk through the fundamentals across the property sectors. Consistent leasing, re-leasing, and rent growth is the key to value creation in the retail and office sectors. Our commercial properties maintained 95.6% occupancy, while our teams executed 37 commercial leases for a total of approximately 275,000 sq ft at spreads of 16.7% on a GAAP basis. Our high-quality office product remains well-leased and in high demand at 95% occupied, with significant opportunities to add to the income stream in the coming weeks and months. The stabilized assets within the portfolio continue to exhibit strength, while the tenant credit profile remains strong. As we have proven over the past few years, our office product continues to perform well with the occupancy currently sitting at 94.4%. Remember that 95% of our office ABR sits in mixed-use communities. These ecosystems provide locations for employers to attract their workforce and future talent, resulting in demand for the trophy space. I'll conclude the office comments by saying that we are and have been at 95% occupancy, with minimal vacancy and near-term rollover, while others are celebrating incrementally moving toward the high 80s and low 90s. Our biggest issue in the office portfolio is accommodating growing tenant demand for expansion space with limited inventory. Our retail portfolio had a strong performance with 96.2% occupancy. We executed new leases, extensions, or options covering over 193,000 sq ft. Regarding the two Bed Bath & Beyond vacancies in the portfolio, I'm pleased to report that as of today, we have executed a lease with a national retailer to fully backfill one and are negotiating leases to substantially backfill the other. I look forward to sharing additional details in the coming weeks. The releasing spreads were 13.1%, and same-store sales were essentially flat for the quarter. Overall, we are seeing strong demand from retail tenants looking for space in a supply-constrained market. That said, we have not lost sight of the renewals and re-leasing required to remain at this level of occupancy. The multifamily portfolio continues to operate well at 95.3% occupancy despite facing competitive headwinds from increased supply, as well as certain asset-specific operational challenges. We see these as short-term issues based on the superior location of our assets and our historical successes and performance in the broader Southeast multifamily market. Otherwise, the rent growth in our markets, such as Baltimore and Virginia Beach, continues to create lift, and we stand by our thesis. Well-located, amenitized, and high-quality assets outperform the competition within the sub-markets. We received questions on asset recycling as a means of raising capital and would like to take a minute to address our posture on strategic capital allocation. To be clear, we constantly analyze all options available for the best possible capital allocation decisions. In today's dynamic real estate market, disciplined investing is essential for optimizing portfolio performance and driving long-term value creation. Given increased investor demand for stable retail assets, opportunities to accretively recycle capital into higher-growth assets within the retail segment or reallocate capital out of retail and into multifamily are more possible today than they have been in recent years. That said, we ultimately need to review all options in order to grow the firm and accomplish our long-term objectives mentioned a few minutes ago, increasing the quality of the income stream and balance sheet, but also achieving the incremental reduction in our relative cost of capital as we achieve scale. Before we conclude, I want to take a moment to express my gratitude to the Armada Hoffler team. Your hard work, dedication, and resilience have been pivotal to the company and its success. Thank you for your commitment to excellence. I'm honored to work alongside each of you as we move forward into the next phase of Armada Hoffler. I want to say thank you to all of our investors, pre-existing and new, for your investment and confidence in our company. I will now turn the call to Matt. Good morning, and thank you, Shawn. For the third quarter of 2024, we reported normalized FFO of $0.35 per diluted share and FFO of $0.14 per diluted share. These results are in line with our expectations. This quarter, we announced that Stifel Financial Corp. agreed to lease 35,000 sq ft of office space at Wills Wharf in Harbor Point. In order to accommodate Stifel's relocation, we negotiated an early termination of the existing office tenant's lease and, in the process, recognized a significant non-recurring termination fee that increased NOI for the quarter. We are looking forward to our new tenant Stifel moving into that space in the first quarter of 2025, demonstrating that high-quality, well-located real estate stays occupied regardless of the market conditions. The variance between FFO and normalized FFO during the quarter is due to the change in fair market value of our derivatives, reflecting a more constructive macroeconomic rate environment. With this quarter's strong performance, we maintain our estimate that we will achieve the top end of our guidance range, which has narrowed, eliminating some of the downside as we move into the final quarter of the year. As our development projects in Harbor Point and Roswell are completed and the delivery of these assets are finalized, we may experience some movement in the timing of capitalized interest, reducing our guidance range for interest expense. Pushing these projects into next year means we will continue to capitalize the interest rather than recognizing it as a current expense. Each of our operating segments produced robust results this quarter, with occupancy slightly increasing to above 95% across the portfolio. The construction management segment posted $3.4 million of gross profit in line with our estimates. We are on track to achieve our guidance midpoint for this segment, a significant all-time high for that subsidiary. We expect that this segment's financial performance will return closer to its historical levels in the high single digits next year, placing some expected downward pressure on earnings growth. Looking specifically at the portfolio performance, all three segments posted positive releasing spreads. The retail segment achieved 13.1% GAAP spread, with the office segment achieving 18.5% GAAP spread. These results were 7.8% and 0.8% on a cash basis, respectively. Our multifamily portfolio reported a combined tradeout spread of 1.8% for the quarter, consistent with the 2.0% reported last quarter. Renewal spreads on apartment leases remained strong at 4.9% for the third quarter, consistent at 4.7% for the month of October. New lease tradeouts did see some pressure in the third quarter, reporting negative 0.6%. This is mainly due to one asset, The Everly in Gainesville, Georgia, currently competing with some very aggressive incentives on products working toward stabilization. We expect that this will return to more normalized levels in the next 12 months as the supply and demand equation in that market reverts to its historical equilibrium. Our portfolio same-store NOI growth was negative 1.0% on a GAAP basis and negative 3% on a cash basis. The office segment was a standout performer this quarter, posting 6.1% GAAP and negative 0.5% cash same-store growth, excluding the termination fee mentioned previously. On the balance sheet side, we were very active for the third quarter, raising $22.1 million on the ATM in addition to the $108 million of proceeds through a public common stock offering, taking advantage of the wider market rotation into rate-sensitive sectors and the especially strong bid for REITs. This equity injection allowed us to deleverage the company on both stabilized and net debt metrics, bringing us down to 5.9x and 7.2x, respectively, which positions us for our near and long-term growth ambitions that Shawn detailed. We intend to continue to monitor the market for opportunities to execute on accretive balance sheet transactions. We used the proceeds of our ATM sales and our common stock offering to pay three loans on Chronicle Mill, the Premier Apartments, and Market at Mill Creek, with the remainder paying down our line of credit. We are pleased with the execution of the equity activities, which set a foundation for another step in our balance sheet transformation towards higher quality, long-term fixed-rate debt. As stated last quarter, we intend to maintain and benefit from our investment-grade credit rating. We remain vigilant within the debt private placement market, and when rates and spreads reach our desired window, we are ready to execute. Thank you again to everyone who has joined the call. As I said earlier, this is my last earnings call as a CEO. I want to take a minute to express my gratitude to all who have been a part of our company over the years. From Rob Stevenson, who has been with us since the IPO, to our analysts who have worked diligently to cover the company, and our investor base that has supported the story and the entire Armada Hoffler team for their unwavering dedication, it has been my honor. I look forward to supporting Shawn and the leadership team as executive chairman as they propel the company forward. Operator, we are now ready for the question and answer session. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star button followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star button followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Rob Stevenson of Janney. Please go ahead. Good morning, guys. Shawn, you talked in your prepared remarks about four, I think it was four multifamily properties with like 900 units that you were adding. What assets are those? So in the capital raise, we reviewed the Allied, which you all know about, and the idea there was the Allied and Southern Post, which is the Chandler, to equitize them appropriately. And then there are two more, both of which are on the preferred equity platform. One is the Allure, and the other is Gainesville II down in Gainesville, Georgia. The idea there was to equitize the two in the development pipeline and then capitalize on the opportunity to grab two of the deals off of the preferred equity or mezzanine financing platform. And when do the preferred ones expect to take control of those? Yeah. We are working on timing now. What we told the market was you could expect anywhere from 6 to 24 months, depending on where the stabilization occurs. In two cases, as I mentioned, we have assets next door, right? One being Harbor Point Allied, the other being Gainesville. We want to make sure we don't erode the foundation. We have some flexibility there. We're working on timing. I would be thinking between 6 and 24 months about bringing those on balance sheet, if you will, and closer to stabilization. Okay. And then anything at this point looking like it's going to pencil economically over the next, I guess, now that we're in November, the next 14 months from a development start front for you guys, or is it still looking challenging in the intermediate term here? You know, Rob, I think 14 months for us is a little bit of a long horizon, right? So we think about it in six-month chunks. I can tell you we don't have anything sitting in front of us right now, aside from the redevelopment of the Bed Bath & Beyond here in Virginia Beach, which I alluded to having that substantially kind of an eye, at least a line of sight on having that substantially full. We've kicked off that process. So we're excited about that. But in terms of ground-up brand new development, I don't have anything that we're comfortable talking to you about today in terms of spread. There are some interesting deals out there. We just don't believe the spread is the arbitrage there has been created wide enough for us to bring it to market. Okay. And then the Bed Bath & Beyond, the one that you have the national tenant ready to take over, that's the Virginia Beach asset? No, sir. That's the Durham asset. The Virginia Beach asset is the redevelopment play. Okay. And is that multiple tenants? It wasn't clear to me whether or not you had several tenants looking at the space or whether or not it was going to be broken down and diced into several smaller boxes on the redevelopment. So the Durham asset is one user taking the entire space. Virginia Beach asset, as we said today, will be cut into three boxes. We'll essentially refaçade to get this high-quality tenant where it needs to be from a market standpoint. And so essentially, we'll divide that box into three, put a new façade on the building, and we'll be up and running. So kind of a quick and dirty redevelopment play there. But again, we're really excited about that. Hope to be able to come to you in a few weeks to talk about that in more detail. All right. That's it for me. Just Lou, you're going to be missed and look forward to hearing all about your jet skiing adventures with Mike O'Hara in the future. Thanks, Rob. We'll keep you up to date. All right, guys. Thanks. Thank you. Your next question comes from the line of Andrew Berger of Bank of America. Please go ahead. Good morning and congrats to both Lou and Shawn on the transition. Maybe question for Shawn, just wanted to ask about your latest thoughts on office. Sounds like multifamily and retail is where you're seeing the best opportunities right now. We have seen a lot of recovery in certain markets in office. Fundamentals, you've spoken positively about your portfolio. Biggest challenge is that you don't have the space to accommodate tenants. So why are you a bit more hesitant to build office? Any thoughts on that? Yeah. I think at the end of the day, well, let's start by saying the third quarter, same-store with 6.1%, as I mentioned, and the renewal spreads are 18.5%, which is strong. We're at 95%, Andrew, and we have been at 95%. And I want to make sure that gets in this call again. I know I said it once. I'll say it again. I think the challenge goes back to this notion of spread, right? Not only is it the office that people have been nervous about over the past 24, 36, 48 months, but also this notion of how can you actually build that at today's cost with the appropriate spread? And we don't believe that on a risk-adjusted return basis or yield basis. We don't believe that works. So it's in the same basket as the rest. I will say that we still stand by our office product. Does that mean we want to run out and create some new office product? Not necessarily. Not right now. We don't think it's the right timing. And so I would say that the broad answer is the spreads don't work on a risk-adjusted basis. One, two, we believe that we have the supply-demand equation leaning in our favor. So there are a bunch of considerations there. The product we do have, as you know, is Trophy, and we'll continue to market that. And obviously, from the results, yield strong results as a result of that supply-demand equation. Got it. That's helpful. Maybe just to follow up, are you able to quantify in any way the spread that would be attractive across the different asset classes, maybe how far off one is from another? Just curious what you're seeing today. Yeah. I think, well, generally speaking, what the company has targeted in the past was essentially a 20% spread. I will tell you that is very difficult to achieve today. I think the answer to your question lies in the investor's mind, Andrew, because they're going to want a higher spread for an office than they are a multifamily, right? And at the end of the day, let's just use the 20%. We don't even believe you can get there as we sit today. So we're constantly evaluating opportunities. And as you would imagine, the office requires a much larger spread than, for instance, a multifamily. So we're not anywhere close to the kind of larger spreads on office. So I would say that's probably the last thing you'd see as to relative to our three product types. Got it. Well, appreciate the color. And maybe just one more from Matt on the balance sheet. A couple larger pieces of debt coming due starting in May and then a few secured pieces in 2026. I'm just curious, what are the latest conversations on addressing those? Yes, Sonny, thank you, Andrew. The term loan that comes due in May actually has a one-year extension. You can probably see that in the footnote of the supplemental. So we really have to start thinking about that in the middle of 2026. All of that unsecured debt are prime candidates for a debt private placement. As I said in my prepared remarks, we're monitoring that heavily. We intend to retain and use our credit rating. And when the timing is right, we are ready to jump into that debt private placement market and put some higher quality long-term fixed-rate debt on our balance sheet. Great. Thank you. Thank you. Your next question comes from the line of Peter Abramovich of Jefferies. Please go ahead. Yeah. Thank you. And just to follow up on Matt's comments there, Matt, just kind of curious what you're seeing today in terms of spreads in the private placement market, where you think your cost of debt would be on sort of a 10-year issuance today, and then where you would like to see it get to to actually execute? Yes. Sonny, good morning, Peter. Great question. The last time we looked at it a couple of weeks ago, we were being told by advisors that we had been around the 6.5% on a 10-year for the cost of debt on a 10-year, the 10-year plus our spread. I know the 10-year has actually increased since then, so it may have risen a little. We would like to be closer to 6%. Probably if we could get under 6%, that would be ideal, but closer to 6% would be more favorable for our window. Okay. That's helpful. And then I know you're not giving 25 guidance. Maybe you've talked about some of the moving pieces, but just in terms of organic growth in the same store portfolio, could you just talk about maybe some of the puts and takes we should be thinking about across the different property segments as we look to 25? Yes, Sonny, Peter. So if we're looking across organic growth in the portfolio for next year, the biggest opportunities we have is at The Interlock asset in West Midtown Atlanta. That's a fantastic asset. And the team have got a number of prospective tenants, both in the office and the retail space there that they're working on. What I think we would kind of have everybody look at is the kind of inorganic growth. You have the Allied apartments leasing up. You have Southern Post coming up to full stabilization. And obviously, T. Rowe Price is going to come in in the T. Rowe asset there at the beginning of next year. Yeah. I think I would add to that, Peter. We have had some interest, and I do not want to get too far over the skis here, but we have had some interest in the office product that we are working on now. I got heads shaking around the table. I think this is a game of Tetris for us. How do we best fit the pieces in, especially here in Virginia Beach, right, to Matt's point? We got some opportunity down in the southeast. But I think that is how we are thinking about growth. How do we take what limited inventory we have or vacancy we have and capitalize on that? We've got a couple of ideas there. So I think for us, it's slow and steady wins the race at this point, and we're going to continue to create value on the margins there, if you will. I think is the appropriate way to say it. Okay. That's helpful, and then just one more on the financing market. I think some of the office retail office assets starting to loosen up. Just curious what you're seeing sort of on that side and potentially what that might mean for buyers if you are looking to monetize T. Rowe as you get closer to stabilization. I think, Peter, I'll jump in really quick. Yeah. I think the sentiment is moving in the right direction. Our view is it's still pretty early, especially to be talking about trades, and So, Matt, I don't know if you want to add some color to that in the secured market space, but yes, we actually, Peter, haven't looked into the secured financing, obviously, as we talk about where we're trying to transition the balance sheet to kind of a higher quality debt. That doesn't mean that we wouldn't look at that when one of our office assets comes up for renewal, but the first office asset that we need to look at is the Constellation Building, and that's a number of years out with its extension options. All right. That's all for me. Thanks. Thank you, Peter. Thank you. Once again, ladies and gentlemen, should you have a question, please press the star button followed by the number one on your touch-tone phone. Should you wish to decline from the polling process, please press the start button followed by the number two. There are no further questions at this time. I'd now like to turn the call back over. Yes, sir. I was just going to say, if there are no further questions, I just want to say to the team here at Armada Hoffler, Lou, thank you again for your leadership to the investors and stakeholders on the phone with us. We really appreciate you taking the time to listen to the story and look forward to some exciting news on the forefront. So thank you again and have a nice rest of your morning. I'd now like to turn the call back. Ladies and gentlemen, this concludes our conference call for today. We thank you for participating and ask that please disconnect your lines. Thank you very much.