Armada Hoffler Properties Agrees to Acquire $170.5M Retail Portfolio

Armada Hoffler Properties, Inc. (NYSE: AHH) announced today that it has entered into an agreement to acquire a portfolio of eleven retail centers located throughout the Mid-Atlantic and South-Central United States for approximately $170.5 million in cash. The portfolio was 94% occupied as of October 31, 2015 and comprises approximately 1.1 million square feet of space. The agreement provides that the Company will acquire all of the interests in each of the eleven properties in the portfolio.

The core of the portfolio – representing approximately 75% of the in-place net operating income – consists of six retail centers well positioned along the I-85 corridor between Raleigh-Durham, North Carolina and Greenville, South Carolina. These core assets feature major anchor tenants including Harris Teeter, PetSmart, T.J. Maxx, Bed Bath & Beyond, Ross Dress for Less, Hobby Lobby and Petco. The remaining five properties in the portfolio are each Kroger-anchored retail centers located in Nashville and Oakland, Tennessee, Waynesboro, Virginia, South Bend, Indiana and Pasadena, Texas.

The Company intends to fund the $170.5 million purchase price with the net proceeds from the recent sale of the Oceaneering International facility, the pending sale of the Richmond Tower office building and borrowings under the Company’s unsecured revolving credit facility. The Company recently agreed to sell the Richmond Tower office building for $78 million and completed the sale of the Oceaneering building for $30 million. Both the portfolio acquisition and the sale of the Richmond Tower office building are expected to close in the first quarter of 2016, subject to the satisfaction of certain customary closing conditions.

“This is a prime opportunity for us to acquire a portfolio of retail assets anchored by credit-quality, brand-name tenants,” commented Louis Haddad, President and CEO. “Through this acquisition, we recycle capital into high-quality real estate, diversify our tenant base and expand our geographic footprint – all at an attractive cap rate approaching 7%. The six retail centers located in the Carolinas fit perfectly into our core operating portfolio. We are currently evaluating certain properties located outside the Carolinas for potential sale after closing of the acquisition in order to generate proceeds of between $20 million and $25 million.”

Forward-Looking Statements

Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statement. These forward-looking statements include comments relating to, among other things, the completion of the portfolio acquisition, the sale of the Richmond Tower office building and the satisfaction of conditions to closing. For a description of factors that may cause the Company’s actual results or performance to differ from its forward-looking statements, please review the information under the heading “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, and other documents filed by the Company with the Securities and Exchange Commission.

About Armada Hoffler Properties, Inc.

Armada Hoffler Properties, Inc. 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 throughout the Mid-Atlantic United States. The Company has elected to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes.

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