Armada Hoffler Properties Stock’s Price & Dividends on the Rise
January 30, 2023
AHH Stock’s Dividends & Share Price Are Compelling
Armada Hoffler Properties Inc’s (NYSE:AHH) share price and dividends took a hit during the COVID-19 pandemic. In just two months, Armada Hoffler Properties stock lost approximately 60% of its value. To add insult to injury, dividend hogs saw the company suspend its dividend in the second quarter of 2022. The dividend was reinstated in the third quarter, but it was reduced from $0.22 to $0.11 per share.
For the most part, AHH stock’s price and dividend have been on the mend since then. Since bottoming in May 2020, Armada Hoffler Properties stock’s price has rallied by 117%. Since late September 2022, Armada Hoffler Properties Inc’s share price has climbed by roughly 24%. Since December 2021, AHH stock’s quarterly dividend has been hiked four times, increasing by 72% from $0.11 to $0.19, for a yield of 6.3%.
There’s still room for growth. Armada Hoffler Properties stock’s price needs to grow by approximately 26% to get to its pre-pandemic level, and its dividend needs to rise by 15.7% to reach its pre-pandemic level of $0.22 per share.
There’s reason to be optimistic. Armada Hoffler Properties Inc has been experiencing sustained financial growth across its entire real estate portfolio, its accretive development projects have been coming on line, and its earnings are poised to surpass their pre-pandemic level. Management has raised their financial guidance for three consecutive quarters.
This has provided the company’s board with enough confidence to continue hiking AHH stock’s quarterly high-yield dividends. It has also forced Wall Street analysts to take a second look at Armada Hoffler Properties stock and increase their share-price target. Of the analysts providing a 12-month forecast for Armada Hoffler Properties Inc, their target range is $15.25 to $17.50, pointing to potential gains in the range of 24.5% to 43.2%.
Those numbers are certainly out of the ordinary. Before the pandemic, AHH stock was trading around $18.00, with normalized funds from operations (NFFO) of $1.17. In late 2022, the stock was trading near $12.00 per share and management was predicting full-year NFFO of $1.19 per share.
Chart courtesy of StockCharts.com
About Armada Hoffler Properties Inc
Armada Hoffler Properties is a self-managed real estate investment trust (REIT) that develops, builds, acquires, and manages office, retail, and multifamily residential properties that are primarily located in the Mid-Atlantic and the southeastern U.S. (Source: “Investor Presentation: November 2022,” Armada Hoffler Properties Inc, last accessed January 27, 2022.)
The REIT’s core properties are in Georgia, Maryland, North Carolina, South Carolina, and Virginia, with a concentration of properties strategically located in Coastal Virginia, the Greater Baltimore/Washington, D.C. area, and a selection of markets throughout the Carolinas.
Armada Hoffler Properties Inc’s real estate portfolio consists of:
- Nine office properties covering 2.1 million rentable square feet, with an occupancy rate of 96.8%
- 37 retail properties covering 3.8 million rentable square feet, with an all-time-high occupancy rate of 98%
- 10 multifamily properties with 2,947 units, with an occupancy rate of 96.4%
The company’s real estate portfolio is always in flux. In July 2022, it completed the $150.0-million sale of a 416-unit suburban midrise apartment community in Howard County, Maryland.
Armada Hoffler Properties Inc’s top office tenants include Duke University, Exelon Corp (NASDAQ:EXC), Morgan Stanley (NYSE:MS), and Transamerica Corporation. Its top retailer tenants include Costco Wholesale Corporation (NASDAQ:COST), Home Depot Inc (NYSE:HD), PetSmart, LLC, and Whole Foods Market IP, Inc.
Management Reports Strong Q3 Results & Raises NFFO Guidance
For the third quarter ended September 30, 2022, Armada Hoffler Properties reported net income of $33.9 million, or $0.38 per share. That was up significantly over its third-quarter 2021 net income of $4.9 million, or $0.06 per share. (Source: “Armada Hoffler Properties Reports Third Quarter 2022 Results,” Armada Hoffler Properties Inc, November 8, 2022.)
The REIT’s cash flow from operations in the third quarter of 2022 came in at $22.7 million, or $0.26 per diluted share. That was up by 3.6% over the $21.9 million, or $0.27 per diluted share, in the third quarter of 2021. Its NFFO in the third quarter of 2022 was $25.8 million, or $0.29 per share, up by 19.4% over the third-quarter 2021 NFFO of $21.6 million, or $0.26 per share.
Management increased their 2022 full-year NFFO guidance from the range of $1.16–$1.20 per diluted share to $1.18–$1.20 per diluted share.
Louis Haddad, Armada Hoffler Properties Inc’s president and CEO, noted, “After raising our guidance for a 3rd consecutive quarter, our new mid-point of $1.19 per share represents an 11% increase over full year 2021 earnings, which is complemented by the 18% increase in the dividend this year.” (Source: Ibid.)
He added, “This is wholly consistent with the data included in our initial guidance presentation from earlier this year, where we projected that [net operating income] would, over the next few years, increase by 45% over 2021 levels as our development projects stabilize.”
The Lowdown on Armada Hoffler Properties Stock
Armada Hoffler Properties Inc is an undervalued REIT with tremendous potential. It has a diverse portfolio of high-end properties, it reported excellent third-quarter financial results, and it raised its full-year 2022 guidance.
The REIT’s share price needs to climb by about a quarter to get to where it was before the pandemic, but its NFFO per share is expected to have been higher in 2022 than it was in 2019. AHH stock could get a significant boost after the company reports its full-year financial results in mid-February.
