Q3 2024 Armada Hoffler Properties Inc Earnings Call
Good morning, ladies and gentlemen and welcome to the Armada Hawthorne 3rd quarter, 24th, earnings call conference school.
Speaker Change: 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 cold, you're acquiring redit assistance, please press star zero for the operator. This call is being recorded in Tuesday, November 5, 2024. I would now like to turn the call over to Chelsea Forrest by President of Investor Relations. Please go ahead.
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Chelsea Forrest: Good morning and thank you for joining our Moda Hawthorne third quarter 2020 for earnings conference call in webcast. On the call this morning in addition to myself is Lou Haddad, Chairman and CEO, Sean Tibbetts, President and CEO, and Matthew Barnes-Betts, the F.O. The prepped 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 30, 2024. The number to access the replay are provided in their earnings press release.
Chelsea Forrest: For those who listen to the rebroadcast of this presentation, we remind you that the remark made here in our adive today November 5th, 2024, and will not be updated subsequent to this initial earnings call.
Chelsea Forrest: During this call we made it forward looking statements, including statements related to the feature performance of our portfolio.
Our development pipeline, the impact of acquisitions and dissed additions.
our mezzanine program, our construction business, our liquidity position, our portfolio performance, and financing activities as well as comments on our guidance and outlook.
Chelsea Forrest: 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.
Chelsea Forrest: 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.
Chelsea Forrest: 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.
Speaker Change: I'll now turn the call over to Lou.
Lou Haddad: Good morning, everyone. Thank you for joining us today.
Lou Haddad: 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 Sean 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 Sean, Matt, and the rest of the team as executive chairmen.
Lou Haddad: This will be my final earnings call as CEO, and I couldn't be more excited for the future of Armada Hotware.
Lou Haddad: This transition is more than a new leader at the helm.
Chelsea Forrest: The company has been moving towards a stronger balance sheet, higher emphasis on property NOI growth, and less reliance on fee income.
Chelsea Forrest: 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.
Chelsea Forrest: I look forward to sharing our results today and discussing the bright path ahead.
Chelsea Forrest: I will now turn the call over to Sean. 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 and leading Armada-Hoffler to achieve our strategic long-term objectives.
Chelsea Forrest: 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.
Chelsea Forrest: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: specifically in the multi-family segment.
Chelsea Forrest: 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.
Chelsea Forrest: resulting in a 37% increase in door count.
Chelsea Forrest: 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.
Chelsea Forrest: 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.
Chelsea Forrest: 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.
Chelsea Forrest: 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.
Chelsea Forrest: As you can see from the release, we had another strong performance for Q3 2024 at $0.35 normalized FFO per diluted share.
Chelsea Forrest: Our best-in-class portfolio features minimal lease maturities for the next few years. We are currently experiencing minor development delays at Harbor Point and Baltimore, and as a result, we now expect both projects to be delivered in early 2025.
Chelsea Forrest: The most notable impact relates to Allied, which we now expect will deliver in early 2025.
Chelsea Forrest: 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.
Chelsea Forrest: With initial delivery anticipated for early 2025, the 18 to 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.
Chelsea Forrest: 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.
Chelsea Forrest: 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.
Chelsea Forrest: 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 submarkets.
Chelsea Forrest: Although development execution is inherently complicated, the degree of value creation is nothing short of impressive.
Chelsea Forrest: 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.
Chelsea Forrest: 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 and multifamily, the operating environment across our sectors remains strong.
Chelsea Forrest: 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.
Chelsea Forrest: Those efforts are bolstered by properties that are the newest and best assets which are strategically positioned in attractive growth markets.
Chelsea Forrest: 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.
Chelsea Forrest: Speaking of next year's.
Chelsea Forrest: 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.
Chelsea Forrest: My remarks at the event emphasize 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.
Chelsea Forrest: And I couldn't be more proud to represent the company as we achieved this exciting milestone.
Chelsea Forrest: 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.
Chelsea Forrest: Let's quickly walk through the fundamentals across the property sectors.
Chelsea Forrest: Consistent leasing, releasing, and rent growth is the key to value creation in the retail and office sectors.
Chelsea Forrest: Our commercial properties maintained 95.6% occupancy, while our teams executed 37 commercial leases for a total of approximately 275,000 square feet at spreads of 16.7% on a gap basis.
Chelsea Forrest: Our high quality office product remains well leased.
Chelsea Forrest: 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.
Chelsea Forrest: 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.
Chelsea Forrest: These ecosystems provide locations for employers to attract their workforce and future talent, resulting in demand for the trophy space.
Chelsea Forrest: I'll conclude the office comments by saying that we are, and have been, at 95% occupancy.
Chelsea Forrest: with minimal vacancy and near-term rollover.
Chelsea Forrest: 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.
Chelsea Forrest: Our retail portfolio had a strong performance with 96.2% occupancy. We executed new leases, extensions, or options covering over 193,000 square feet.
Chelsea Forrest: Regarding the two bed, bath, and beyond vacancies in the portfolio, I am 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.
Chelsea Forrest: I look forward to sharing additional details in the coming weeks.
Chelsea Forrest: 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.
Chelsea Forrest: That said, we have not lost sight of the renewals and releasing required to remain at this level of occupancy.
Chelsea Forrest: 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.
Chelsea Forrest: 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.
Chelsea Forrest: Otherwise, the rent growth in our markets, such as Baltimore and Virginia Beach, continue to create lift, and we stand by our thesis.
Chelsea Forrest: 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.
Chelsea Forrest: To be clear, we constantly analyze all options available for the best possible capital allocation decisions.
Chelsea Forrest: In today's dynamic real estate market, disciplined investing is essential for optimizing portfolio performance and driving long-term value creation.
Chelsea Forrest: 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.
Chelsea Forrest: 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.
Chelsea Forrest: Before we conclude, I want to take a moment to express my gratitude to the ArmadaHoffler team. Your hard work, dedication, and resilience have been pivotal to the company and its success. Thank you for your commitment to excellence.
Chelsea Forrest: I'm honored to work alongside each of you as we move forward into the next phase of Ramada Hopland.
Chelsea Forrest: 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, Sean.
Matt: 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.
Chelsea Forrest: This quarter we announce that Stiefel Financial Corp agreed to lease 35,000 square feet of office space at Wills Wharf in Harbour Point.
Chelsea Forrest: In order to accommodate Seaport's relocation, we negotiated an early termination of the existing Office 10's lease and in the process recognized a significant, non-reoccurring termination fee that increased NOI for the quarter.
Chelsea Forrest: We are looking forward to our new tenant steeple 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.
Chelsea Forrest: The variance between FFO and normalised FFO during the quarter is due to the change in fair market value of our derivatives, reflecting a more constructive macroeconomic rate environment.
Chelsea Forrest: With this quarter's strong performance, we maintain our estimate that we will achieve the top end of our guidance range.
Chelsea Forrest: which has narrowed.
Chelsea Forrest: eliminating some of the downside as we move into the final quarter of the year. As our development projects in Harbour 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.
Chelsea Forrest: Pushing these projects into next year means we will continue to capitalise the interest rather than recognising it as a current expense.
Chelsea Forrest: 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.
Chelsea Forrest: We're on track to achieve our guidance midpoint for this segment, a significant all-time high for that societary.
Chelsea Forrest: 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.
Chelsea Forrest: Looking specifically at the portfolio performance, all three segments posted positive releasing spreads. The retail segment achieved 13.1% gap spread with the office segment achieving 18.5% gap spread.
Chelsea Forrest: These results were 7.8% and 0.8% on a cash basis, respectively.
Chelsea Forrest: Our multifamily portfolio reported a combined trade outspread of 1.8% for the quarter, consistent with the 2.0% reported last quarter.
Chelsea Forrest: Renewal spreads on apartment leases remain strong at 4.9% for the third quarter, consistent at 4.7% for the month of October. New lease trade-outs did see some pressure in the third quarter, reporting negative 0.6%.
Chelsea Forrest: This is mainly due to one asset, the Everly in Gainesville, Georgia, currently competing with some very aggressive incentives on products working towards stabilization.
Chelsea Forrest: 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.
Chelsea Forrest: Our portfolio, same store NRI growth, was negative 1.0% on a gap basis and negative 3% on a cash basis.
Chelsea Forrest: The office segment was a standout performer this quarter, posting 6.1% gap and negative 0.5% cash same-store growth, excluding the termination fee mentioned previously.
Chelsea Forrest: On the balance sheet side, we are 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.
Chelsea Forrest: This equity injection allowed us to de-leverage the company on both stabilized and net debt metrics, bringing us down to 5.9 times and 7.2 times respectively, which positions us for our near and long-term growth ambitions that Shaun detailed.
Chelsea Forrest: We intend to continue to monitor the market for opportunities to execute on a creative balance sheet transactions.
Chelsea Forrest: We used the proceeds of our ATM sales and our common stock offering to pay three loans on Chronicle Mill.
Chelsea Forrest: the premier apartments and market at Mill Creek with the remainder paying down our line of credits. 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.
Chelsea Forrest: 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.
Speaker Change: 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.
Chelsea Forrest: From Rob Stephenson who has been with us since the IPO, newer 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.
Chelsea Forrest: I look forward to supporting Sean and the leadership team as executive chairmen as they propel the company forward. Operator, we are now ready for the question and answer session.
Speaker Change: 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 touchtone 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.
Speaker Change: One moment, please, for your first question.
Speaker Change: Your first question comes from the line of Rob Stephenson of Training. Please go ahead.
Rob Stephenson: Good morning, guys. Sean, 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?
Speaker Change: So in the capital raise, we reviewed the Allied, which you all know about, and the idea there was the Allied and Southern Post.
Speaker Change: which is the channeler, to equitize them appropriately. And then there are two more, both of which are on the preferred equity platform. One is the Allure.
Speaker Change: and the other is Gainesville, too, down in Gainesville, Georgia. So the idea there was to equitize the two in the development pipeline and then capitalize on the opportunity to grab two of the
Speaker Change: deals off of the preferred equity or mezzanine financing platform.
Speaker Change: And when do the preferred ones expect to take control of those?
Speaker Change: Yeah, so we're we are working on timing now what we told the market was you could expect anywhere from 6 to 24 months
Speaker Change: 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. So we want to make sure we don't erode the foundation. We have some flexibility there. So we're working on timing. But I would be thinking between 6 and 24 months.
Speaker Change: you know, about bringing those on balance sheet, if you will, and closer to stabilization.
Speaker Change: Okay and then anything at this point looking like it's going to pencil economically in you know 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?
Speaker Change: you know, in the intermediate term here.
Speaker Change: You know, Rob, I think 14 months for us is a little bit of a long horizon, right? Like, so we think about it in six-month chunks.
Speaker Change: 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 at Virginia Beach.
Speaker Change: which I alluded to, having that substantial lead.
Speaker Change: kind of and I at least a line of sight on having that substantially full we've kicked off that process so we're
Speaker Change: We're excited about that, but in terms of, you know, 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, is the arbitrage there has been created wide enough for us to bring it to market.
Speaker Change: 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?
Speaker Change: No, sir, that's the Durham asset. The Redundych asset is the redevelopment flag. 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.
Speaker Change: on the redevelopment. So, essentially, the Durham asset is one user taking the entire space.
Speaker Change: Virginia Beach Asset, as we said today, will be cut into three boxes.
Speaker Change: We'll essentially re-facade to get this high-quality tenant where it needs to be from a market standpoint. And so essentially we'll demise that box into three, put a new facade 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 go to company in a few weeks to talk about that in more detail.
Speaker Change: All right, that's it for me just Lou you're gonna 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
Speaker Change: Thank you for watching. Please subscribe. See you next time.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Andrew Berger of Bank of America. Please go ahead.
Andrew Berger: Good morning and congrats to both Lou and Sean on the transition. Maybe a question for Sean, just wanted to ask about, you know, your latest thoughts on office. Sounds like multifamily and retail is where, you know, you're seeing the best opportunities right now. You know, we have seen a lot of recovery in certain markets and office fundamentals. You've spoken positively about your portfolio, biggest challenges that you don't have the space to accommodate tenants. So, you know, why are you a bit more hesitant to build office? Any thoughts on that?
Speaker Change: Yeah, I think at the end of the day, well, let's start by saying the third quarter
Speaker Change: Same store with 6-1 as I mentioned and the renewal spreads are 18 and a half which is strong
Speaker Change: We're at 95% Andrew and and we have been at 95% and I want to make sure that gets in this call again I know it 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
Speaker Change: 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. We don't believe that, you know, on a risk-adjusted return basis or yield basis. We don't believe that works.
Speaker Change: So, you know, it's in the same basket as the rest.
Speaker Change: I will say that we still stand by our office product. Does that mean we wanna run out and create some new office product? Not necessarily, not right now.
Speaker Change: 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.
Speaker Change: One, two, we believe that we have the supply-demand equation leaning in our favor, so, you know, 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.
Speaker Change: equation.
Speaker Change: 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, you know, maybe how far off one is from another?
Speaker Change: Just curious what you're seeing today.
Speaker Change: Yeah, I think well generally speaking what the company has has targeted in the past was essentially a 20% spread I will tell you that is very difficult to achieve today
Speaker Change: I think the answer to your question lies in the investor's mind.
Speaker Change: Andrew, because they're going to want to hire 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
Speaker Change: As you would imagine, the office requires a much larger spread than, for instance, the 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 us do relative to our three product types.
Speaker Change: Got it. Well, appreciate the color and maybe just one more for Matt on the balance sheet.
Speaker Change: larger pieces of debt coming due starting in May and then a few secured pieces in 26. I'm just curious, you know, what are the latest conversations on addressing those?
Speaker Change: Yes, certainly. 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.
Speaker Change: 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 debts on our balance sheet.
Speaker Change: Great, thank you.
Speaker Change: Thank you. Your next question comes from the line of Peter Abramovitz of Jefferies. Please go ahead.
Peter Abramovitz: 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, you know, where you would like to see it get to, to actually execute.
Speaker Change: Yes, certainly. Good morning, Peter. Great, great question. We, the last time we looked at it a couple of weeks ago, we were being told by our advisors that we had been around the six and a half percent 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.
Peter Abramovitz: 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?
Speaker Change: Yes, certainly Peter. So if we're looking across organic growth in the portfolio for next year, the biggest opportunities we have is at the interlock.
Speaker Change: Acid in West Midtown Atlanta that's a that's a fantastic asset and the team have got a number of prospective tenants both in the office and the retail
Speaker Change: space there that they're working on.
Speaker Change: What I what I think we would, you know, kind of have everybody look at is the kind of unorganic growth You have the Allied apartment leasing up you have Southern Post
Speaker Change: coming you know up to full full stabilization and obviously t-rope price are gonna come in in the
Speaker Change: in the T-Row assets that are at the beginning of next year. Yeah, I think I would add to that, Peter. We've had some interest, and I don't want to get too far over the skis here, but we had some interest in the office product that we're working on now. I got heads shaking around the table and
Speaker Change: 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. Got some opportunity down in the Southeast, but.
Speaker Change: I think that's how we're 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, you know, for us, it's slow and steady wins the race at this point.
Speaker Change: 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.
Speaker Change: okay that's helpful and then just one more on the on the financing market I think some of the office reads
Speaker Change: Office assets starting to loosen up. Just curious what you're seeing sort of on that side and potentially what that might mean for, you know, buyers if you are looking to monetize TRO as you get closer to stabilization.
Speaker Change: I think, Peter, I'll jump in really quick. Yeah, I think, you know, 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
Speaker Change: Market space, but from the yeah, we actually Peter haven't haven't looked into the secured financing Obviously as we talk about we're trying to transition the balance sheet to kind of a higher quality debt That doesn't mean that we 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, obviously
Speaker Change: shits.
Speaker Change: All right, that's all for me. Thanks.
Speaker Change: Thank you, Peter.
Speaker Change: Thank you. Once again, ladies and gentlemen, should you have a question, please press the start button, followed by the number 1 on your touchtone phone.
Speaker Change: Should you wish to decline from the polling process, please press the start button followed by the number 2.
Speaker Change: There are no further questions at this time.
Speaker Change: I'd now like to turn the call back over. Yes, sir.
Speaker Change: 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, have a nice rest of your morning.
Speaker Change: I'd now like to turn the call back over to Matt.
Matt: Thanks for watching!