Armada Hoffler Announces Strategic Steps in Executing Its Balance Sheet Management Strategy

Rhea-AI Summary

Armada Hoffler (NYSE: AHH) has announced several strategic initiatives to reduce its variable rate debt exposure. The company has:

• Executed a $150 million floating-to-fixed rate swap at 2.5% for 2 years, costing $4.6 million
• Repaid $45.6 million of secured variable-rate debt (6.80% weighted average rate)
• Refinanced its Premier mixed-use property with a new $29.4 million agency loan fixed at 5.53% through December 2029
• Reduced its SOFR-referenced revolving credit facility by $19.0 million

Through these actions, AHH is now 100% hedged on its variable rate debt exposure, which it plans to maintain into Q4 2025. The company aims to enhance cash flow stability and better manage interest rate risk.

Positive

• Achieved 100% hedge coverage on variable rate debt exposure
• Secured lower fixed interest rate of 5.53% vs previous 6.4% on Premier property loan
• Increased loan proceeds from $23.4M to $29.4M on Premier property refinancing
• Reduced revolving credit facility exposure by $19.0M

Negative

• Incurred $4.6M cost for interest rate swap
• Still carrying significant debt requiring refinancing and hedging

VIRGINIA BEACH, Va., Jan. 29, 2025 (GLOBE NEWSWIRE) -- Armada Hoffler (NYSE: AHH) announced strategic steps in reducing exposure to variable rate debt as the company continues to execute its balance sheet management strategy. Since the end of the third quarter of 2024, the Company has:

• Executed a $150 million floating-to-fixed rate swap, effective January 2, 2025, with a 2-year term, and a swap fixed rate of 2.5%. The Company bought down the rate for a total cost of $4.6 million. With this trade, Armada Hoffler is 100% hedged on its variable rate debt exposure, which the Company expects to maintain into the fourth quarter of 2025, based on current variable rate debt levels and existing derivative expirations.
• Repaid $45.6 million of secured variable-rate debt with a weighted average effective interest rate of 6.80%.
• Refinanced its Premier mixed-use property for greater loan proceeds at a lower fixed rate in November 2024. The new $29.4 million agency loan is fixed at 5.53% interest-only through maturity in December 2029. The previous $23.4 million variable-rate loan had a stated rate of SOFR plus 1.55% and an effective rate of 6.4%, paid off in September 2024.
• Paid down its SOFR referenced revolving credit facility by $19.0 million through December 31, 2024.

"Armada Hoffler is committed to prudent financial management and continued risk mitigation, and these recent strategic initiatives are key steps in achieving those goals,” said Shawn Tibbetts, Chief Executive Officer and President at Armada Hoffler. “We continue to execute on our strategy to manage interest rate risk and provide greater stability to our cash flow. We believe this enhances our ability to navigate market fluctuations and supports our long-term growth objectives."

About Armada Hoffler

Armada Hoffler (NYSE: AHH) is a vertically integrated, self-managed real estate investment trust (“REIT”) with over four decades of experience developing, building, acquiring, and managing high-quality office, retail, and multifamily properties located primarily 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. Founded in 1979 by Daniel A. Hoffler, Armada Hoffler has elected to be taxed as a REIT for U.S. federal income tax purposes. For more information visit ArmadaHoffler.com.

Contact:

Chelsea Forrest

Armada Hoffler

Vice President of Corporate Communications and Investor Relations

Email: CForrest@ArmadaHoffler.com

Phone: (757) 612-4248

FAQ

What interest rate did AHH secure in its January 2025 floating-to-fixed rate swap?

AHH secured a 2.5% fixed rate in its $150 million floating-to-fixed rate swap, effective January 2, 2025, for a 2-year term.

How much variable-rate debt did AHH repay in late 2024?

AHH repaid $45.6 million of secured variable-rate debt that had a weighted average effective interest rate of 6.80%.

What are the terms of AHH's new Premier property refinancing?

The new $29.4 million agency loan is fixed at 5.53% interest-only through maturity in December 2029.

How long will AHH maintain 100% hedge coverage on its variable rate debt?

AHH expects to maintain 100% hedge coverage on its variable rate debt into the fourth quarter of 2025.

How much did AHH reduce its revolving credit facility by in 2024?

AHH reduced its SOFR referenced revolving credit facility by $19.0 million through December 31, 2024.