Armada Hoffler Properties NYSE: AHRT, now operating under the name AH Realty Trust, used its first-quarter 2026 earnings call to highlight what CEO Shawn Tibbetts called an unusually fast pace of strategic change, including a major multifamily exit, the sale of its construction business, continued wind-down activity in real estate financing, and an expanded share repurchase program.
“Since announcing our strategic restructuring on February 16th, we have executed more transformation milestones in a single quarter than in any comparable period in the company's history,” Tibbetts said. He added that the company raised its full-year 2026 outlook for FFO as adjusted, citing performance in its retail and mixed-use office portfolio and improved visibility into the quarters ahead.
Guidance raised as company emphasizes go-forward retail and mixed-use office platform
Tibbetts said the company increased its full-year 2026 FFO as adjusted guidance to $0.51 to $0.55 per diluted share. The company reported FFO as adjusted of $0.15 per diluted share in the first quarter, which management said exceeded internal expectations.
CFO Matthew Barnes-Smith reported FFO attributable to common shareholders of $20.6 million, or $0.20 per diluted share, and FFO as adjusted attributable to common shareholders of $15.1 million, or $0.15 per diluted share. Barnes-Smith said FFO as adjusted excludes multifamily, construction, and real estate financing because those segments are considered discontinued or non-core as the company completes its transformation.
Net operating income in the quarter was $34.7 million, up 1.8% year over year and about $700,000 ahead of guidance, Barnes-Smith said. The company also reported AFFO of $19.9 million, or $0.19 per diluted share, and Barnes-Smith said this exceeded the cash dividend, with a 72% payout ratio.
Multifamily sale and non-core exits targeted at de-leveraging and simplification
The company’s transformation plan centers on exiting multifamily and other non-core activities to become “a pure play, high-quality retail and mixed use office REIT,” Tibbetts said. During the quarter, the company entered into a binding agreement with an affiliate of Harbor Group International to sell 11 of its 14 multifamily assets for $562 million. Tibbetts said the sale is expected to close “in the coming weeks,” subject to customary closing conditions.
Tibbetts said AH Realty Trust is marketing the remaining two multifamily assets in Gainesville and intends to retain one residential asset, Smith’s Landing, due to its ground lease structure and stable cash flow. In response to a question from Scotiabank’s Viktor Fediv, Tibbetts said the Gainesville assets are “stabilized now,” but the company believes market conditions can support a better price than what a buyer was willing to pay at the time.
Beyond multifamily, Tibbetts said the company has now completed the sale of its construction business and advanced the wind-down of its real estate financing platform, including the sale of two multifamily financing investments. He also said the company’s partner closed on the sale of Allure.
In total, Tibbetts said the dispositions underway or completed are expected to generate about $750 million in proceeds, which the company intends to use primarily to reduce leverage while also repurchasing shares.
Portfolio performance: occupancy, leasing spreads, and tenant activity
EVP of Asset Management Craig Ramiro highlighted a change in disclosure, noting that AH Realty Trust is now providing both leased occupancy and economic occupancy, which accounts for free rent and abatements and is intended to better correlate with cash NOI.
- Retail: leased occupancy of 94.8% and economic occupancy of 92.5% at quarter-end.
- Office: leased occupancy of 96% and economic occupancy of 87.7% at quarter-end.
Ramiro said the company expects retail economic occupancy to rise in the second half of 2026, driven primarily by rent commencements at Columbus Village and the Interlock. Retail same-store NOI grew 2.2% in the quarter, supported by rent commencements and positive cash spreads, but Ramiro said growth is expected to slow due to vacancies and store closures, with full-year same-store NOI growth anticipated to fall within the company’s 1% to 2% projected range.
Ramiro pointed to tenant performance and foot traffic at several properties, including Columbus Village and the Interlock. He said visits to the new Trader Joe’s at Columbus Village were running nearly twice the pace of the only other location in the market, while the new Golf Galaxy ranked in the top three nationwide. At the Interlock, Ramiro said F1 Arcade opened during the quarter and contributed to a 30% year-over-year increase in visits and a 45% increase in parking volume.
He also said some retail performance was offset by vacancies at Southgate Square, Broadmoor Plaza, and Broad Creek Shopping Center and store closures at Hilltop and Town Center. Ramiro said the company is working to backfill spaces previously occupied by Conn’s, Party City, Jo-Ann, West Elm, and Orvis and described tenant demand as “strong.”
In retail leasing, Ramiro reported positive spreads of 14.4% on new leases and 4.5% on renewals in the first quarter.
For office, Ramiro said first-quarter same-store NOI rose 0.7% on contractual rent increases, rent commencements, and 7% positive cash spreads on new leases. He said the company expects full-year office same-store NOI growth to land within its 1.4% to 2.5% projected range, despite the impact of vacancy at One City Center following space reclaimed from WeWork last year.
Ramiro also provided updates on leasing and occupancy dynamics at several office properties, including the Interlock and Southern Post. He said Southern Post leased 22,000 square feet to Industrious during the quarter and signed another 9,000-square-foot lease the prior week, bringing office leased occupancy to “over 93%.” However, he noted that economic occupancy at Southern Post is expected to increase over time as free rent periods burn off.
Capital allocation: buybacks, leverage targets, and refinancing plans
Management repeatedly emphasized share repurchases as a primary near-term use of capital. Tibbetts said the company repurchased about 4.2 million shares year to date for $24.1 million at a weighted average price of about $5.70 per share—more than 4% of common equity. Barnes-Smith framed the buyback decision as taking advantage of a “dislocation between our share price and underlying asset value,” and both executives referenced an implied cap rate above 9% for repurchased shares.
Tibbetts also said the company had initially modeled up to $50 million of retail acquisitions to offset potential gains from the multifamily sale, but after gaining clarity that the transaction is not expected to create material tax consequences to the REIT, AH Realty Trust redirected about half of that modeled acquisition capital toward share repurchases.
On leverage, Barnes-Smith said net debt to total adjusted EBITDA was 8.3x at quarter-end, which he described as “temporarily elevated.” The company reiterated a target leverage range of 5.5x to 6.5x and plans to use multifamily sale proceeds to reach that level.
The company ended the quarter with about $142 million of liquidity, Barnes-Smith said. He also outlined refinancing activity for three 2026 maturities: a term loan maturing at the end of May, Thames Street Wharf maturing at the end of September, and the Constellation Building loan. Barnes-Smith said the company had received term sheets or was in the final stages of each refinancing, including an expected five-year non-recourse note for Thames Street Wharf priced in the 5.25% to 5.5% range.
Looking ahead, Tibbetts summarized the company’s near-term priorities as closing the multifamily transaction, reducing leverage, and continuing buybacks “at a compelling discount to intrinsic value,” while aiming to demonstrate consistent operating results from the retail and mixed-use office portfolio.
About Armada Hoffler Properties NYSE: AHRT
Armada Hoffler Properties, Inc is a publicly traded real estate investment trust (REIT) specializing in the ownership, operation and development of retail, office and mixed-use properties. The company’s portfolio primarily comprises neighborhood and community shopping centers, urban infill retail sites and select office buildings located in high-growth markets. Armada Hoffler also provides in-house property management and leasing services, leveraging its vertically integrated platform to enhance asset value and tenant satisfaction.
Founded on a legacy of commercial real estate development dating back to the 1970s, Armada Hoffler went public in 2016 through a strategic combination of private real estate entities.
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